Retailers face the additional challenge of fierce online competition, leading to companies such as Marks & Spencer and Debenhams shutting stores. Picture: REUTERS
Retailers face the additional challenge of fierce online competition, leading to companies such as Marks & Spencer and Debenhams shutting stores. Picture: REUTERS

London — British retailers plan the least investment in seven years ahead of the country’s departure from the EU, and job cuts in the business sector have gathered pace, a major survey showed on Friday.

Though retailers were the most upbeat about the general business situation in more than two years, Brexit and longer-term structural changes were casting a shadow, according to the quarterly survey from the Confederation of British Industry.

The investment intentions balance plunged to -33 in February from -3 in November, the lowest since February 2012, when Britain’s economy was still trying to shake off the after-effects of the global financial crisis.

The survey’s employment balance was its weakest since August 2017 at -30. Numerous surveys have shown businesses are holding off on investment while Britain remains at risk of leaving the EU on March 29 without an interim trade deal.

Official data for the three months to December published earlier  in February showed the biggest fall in overall business investment since 2010.

“Until politicians can agree a deal that commands a majority in parliament, is acceptable to the EU and protects our economy, business despair will deepen. A deal must be negotiated, and no-deal averted,” CBI economist Anna Leach said.

Retailers face the additional challenge of fierce online competition, leading to companies such as Marks & Spencer and Debenhams shutting stores and others such as Toys R Us UK and electronics retailer Maplin going out of business.

The CBI said February’s monthly sales growth balance held at January’s reading of zero — above a two-year low recorded in December but below its average for most of 2018. But retailers were more upbeat about the prospects for March, with the strongest outlook since 2015 — though in January they had been similarly upbeat about February .

Since then, official data has shown strong retail sales growth in January, helped by bigger-than-normal discounts on clothing. Samuel Tombs of Pantheon Macroeconomics said the CBI data was often more downbeat than the official numbers.

“The continued weakness of the reported sales balance in February should be taken with a pinch of salt,” he said, pointing to improving consumer finances despite a more general economic slowdown ahead of Brexit.

Stronger growth in wages, continued job creation and low inflation was boosting spending power, he said.

Reuters