Retailers should prepare for a slowdown in consumer spending this year but it may not be as bad as feared, believes leading economist Roger Bootle.

Capital Economics founder and chairman Bootle, who will deliver a keynote presentation at Retail Week Live on the outlook in the wake of the UK’s decision to quit the EU, also said that the possibility of the Government unilaterally declaring free trade should not be ruled out if Brexit negotiations become bogged down.

Since the Brexit vote, retailers’ cost pressures have risen as a result of a fall in sterling’s value. Many, such as Next, have warned that prices will rise as a result and there are fears shoppers may consequently rein in spending.

Bootle, a ‘Brexiteer’, told Retail Week. “I think there might be a bit of a slowdown, simply because inflation’s moving up.

“It’s going to eat into the growth of consumers’ real incomes and that will tend to persuade them to spend less than they otherwise would.”

Positive Brexit

However, he did not think a slowdown would be “that large”.

He could also envisage a Brexit scenario that would mean lower prices for consumers.

Bootle said: “There is an option for the British government to say to our Continental partners, ‘Look, this isn’t working out, we’re off and we’re declaring unilateral free trade’.

“That is not a silly idea and if it were to happen, the effect would be bullish for consumers because what we would do would be drop the European Commission External Tariff on imports coming into Britain, we would pull out of the Common Agricultural Policy and stop various quantitative restrictions on overseas exports into Britain.

“The result would be not higher prices but lower prices, and a boost to consumers’ real incomes.”

Introducing Retail Week’s latest multimedia format, Listen. By clicking on the play button you’re able to listen to podcasts and interviews in the background on your computer, smartphone or tablet.

This allows you to listen to our insightful conversations with key players in the industry while you check emails, walk the dog, drive to work, etc.

Keep your eyes on our website for more audio content in the near future.