The government should focus on measures that will increase consumer confidence and spending levels in today’s Budget, according to the Vice President (VP) of European Marketplaces at online retailer eBay Clare Gilmartin.
Chancellor George Osborne has promised to deliver a “Budget for growth” in his speech to parliament from 12:30 GMT, and retail bosses like Gilmartin will be looking for announcements that will improve the mood of UK shoppers.
“The next couple of weeks will be crunch time for retailers who will be keeping a close eye on consumers’ response to the Budget,” she said in a statement.
“Both small to medium-size enterprises and consumers alike will be hoping there are no surprises that could harm the fragile state of consumer spending.”
Her comments come after eBay published new data that shows consumer spending returned to typical seasonal levels in February after a short-term hangover from the VAT rise at the start of 2011.
That is not to say that consumer confidence no longer remains fragile though, as the eBay data for big ticket items shows that sales of fridges and freezers, for example, have been sluggish so far this year.
Purchases of these items dropped by 12 per cent in January compared to December 2010, and only rose six per cent month-on-month in February, which suggests those people who splashed the cash pre-VAT rise are now tightening the purse strings.
Dishwasher sales also fell by four per cent between January and February, according to the eBay research.
The results of the study reflect the findings from other consumer sentiment measures, with Nationwide Building Society recently reporting that UK consumer confidence is at its lowest level since it began recording the mood of the nation in May 2004.
Its Spending Index also noted that people are showing a greater reluctance to part with their money than in previous months.
Gilmartin commented: “While the recent VAT rise only had a short-term negative impact on consumer spending, we know consumers are still feeling the pain as they are budgeting to ensure they can afford basic necessities.
“Although sales figures are rebounding, consumers are becoming more careful with their money, suggesting they appreciate the importance of shopping around for the best value items.”