Fears over the strength of the UK economy appear to have kept shoppers away from high streets on Black Friday, adding to growing evidence that consumer caution will weigh heavily on growth into 2026.
Footfall across all shopping destinations fell by 2% on Friday and was 7.2% lower than the equivalent days last year, according to data from monitoring firm MRI Software. Only locations close to central London offices bucked the trend, seeing a slight lift as workers browsed stores during breaks or on their commutes.
While much Black Friday activity has shifted online, the picture there was also uneven. The online retail association IMRG reported a sharp fall in sales on Thursday but noted a stronger performance earlier in the week.
“The cost of living squeeze appears to be weighing on overall activity,” said Jenni Matthews of MRI Software.
The subdued results coincided with a warning from consultancy KPMG, which said that soft consumer spending would be one of the key drags on the economy over the next 12 months. Although much of the £26bn tax-raising impact of Rachel Reeves’s first budget will not feed through immediately, KPMG said households remain under severe pressure as unemployment edges up towards 5.2%.
“The outlook for growth in 2026 is subdued, reflecting the impact of a cooling labour market and weak household spending,” said Yael Selfin, KPMG’s chief economist. She noted some positive areas, including investment in green energy, and said the medium-term picture could improve if planning reforms help unlock housing construction. KPMG forecasts GDP growth of 1% in 2026 and 1.4% in 2027.
Two separate reports published on Monday reinforced the downbeat outlook among business leaders. The CBI’s latest services sector survey, conducted before the budget, recorded the steepest fall in business optimism in three years, with firms citing rising costs and uncertainty over future demand.
“Businesses expect little near-term relief, with uncertainty about demand and persistent cost pressures set to constrain future hiring and investment plans,” said Charlotte Dendy of the CBI.
Meanwhile, the Institute of Directors said its confidence index remained close to historic lows, slipping to –73 in the run-up to the budget before inching up to –72 afterwards. “Persistent speculation over tax rises kept confidence subdued,” said Anna Leach, the IoD’s chief economist. “With four in five business leaders viewing the budget negatively, confidence remains close to record lows.”
Hospitality businesses also warned they will face significant financial pressure from next year’s business rates changes, despite measures in the budget intended to ease the transition away from Covid-era support schemes. Many pubs are bracing for steep increases due to rises in the rateable value of their premises — a key component of the business rates formula — in contrast to many retailers whose valuations will fall due to weaker high street trading.
In her budget speech, Reeves said she was introducing “permanently lower tax rates for over 750,000 retail, hospitality and leisure properties”, funded in part by higher rates on major retailers and online giants. But operators say the reality for pubs in particular will be far harsher.
“In the vast majority of cases it seems that instead of the promised reduction in our bills, our members will be expected to pay more — in many cases vastly more — once existing support ends next April,” said Paul Crossman, chair of the Campaign for Pubs and licensee of three pubs in York.
Alex Reilley, founder of the café-bar chain Loungers, said the classification of some of the company’s venues softened the impact, but warned that many operators would still face higher costs. “Most hospitality businesses will be looking at an increase of some description,” he said. “For our pub sector it could quite easily be an extinction event.”
The government has pledged billions of pounds in transitional relief to soften large increases in business rates next year, but industry analysts warn the measure merely delays — rather than eliminates — the financial hit.
