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Economy

UK's low-income shoppers pose challenge to economic growth

Friday 07 February 2025 - 09:37

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In Southampton, England, Deb Taylor, a 63-year-old cleaner, left a discount fashion store empty-handed, lamenting that even low-cost items are no longer affordable. Antonia Alden, a stay-at-home mother, also expressed frustration during a rare shopping trip, revealing that she no longer visits stores unless absolutely necessary. These experiences reflect the struggles faced by many low-income households in the UK, where inflation and rising energy bills have led to decreased consumer confidence and spending.

The bottom 20% of earners represent only a small portion of consumer spending, but their reluctance to spend is a significant obstacle for the government, which has prioritized economic growth. Additionally, the Labour Party faces growing pressure from right-wing political groups who resonate with citizens feeling economically marginalized.

Retailers targeting lower-income shoppers are feeling the pinch, with chains like Primark and discount stores reporting weaker performance in crucial shopping seasons. In contrast, mid-market brands like Marks & Spencer and Next have seen better results. Market analysts point to a widening gap between wealthier and poorer households, a trend exacerbated by ongoing financial challenges.

Despite the government's efforts to stabilize the economy with tax hikes and wage increases, many businesses are still grappling with uncertainty. The rise in energy and food costs disproportionately affects the lowest-paid workers, despite wage increases, and the overall inflation rate remains concerning.

Recent reports show that while higher-income households are seeing growth in disposable income, the bottom earners are facing a shortfall, with confidence levels falling sharply. Job insecurity is also rising, with large-scale layoffs in the retail sector further contributing to economic strain.