Rising consumer confidence and a recent baby boom are set to give U.K. retailers their best Christmas since the recession started in 2008, according to the seasonal forecast from researcher Verdict Retail.
Consumers will spend 88 billion pounds ($141 billion) in the fourth quarter, a 2.2 percent increase from last year, Verdict predicted in a report today. After years of declines, sales of non-food items should show an increase, it said, adding that growth in food will be driven mainly by inflation.
Verdict’s report comes amid an improving housing market and increased job creation. Some consumers also have more money from compensation for mis-sold payment protection insurance and the sale of shares in Royal Mail Plc, (RMG) according to Verdict. Growth in holiday spending would provide a boost for retailers, for whom the season is their busiest of the year.
“Shoppers have far more reasons to be cheerful this year,” Maureen Hinton, Verdict’s research director, said in the report. “On top of all this, during the recession there has been a baby boom which means one of the prime targets for Christmas spending, kids, is growing.”
The number of U.K. births in the year through June 2012 was the most since 1972, Office for National Statistics data shows.
Discounting will again be rife over the holiday as non-food retailers battle for business, Verdict predicts.
Online sales in the final quarter are set to reach 11.6 billion pounds, according to the researcher, an increase of 12 percent on last year. More consumers will leave Web purchases until the last minute because of click-and-collect services, where shoppers can pick up orders from stores, Verdict said.
Ernst & Young today raised its forecast for U.K. economic growth to 1.4 percent this year and 2.4 percent in 2014, up from the 1.1 percent and 2.2 percent predictions last quarter.
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