The most important time of the year for business

EVERY year we talk about Christmas as "the most wonderful time of the year" but in terms of the economy, it is also one of the most concentrated bursts of activity in the calendar.

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In a few short weeks, we will find out whether households still feel confident enough to spend, whether retailers can salvage a tough year, and whether hospitality businesses will generate enough cash to get through the quiet months that follow.

Survey data suggests UK consumers are planning to spend around £42bn on Christmas this year or roughly £802 per adult, once you add up gifts, food, travel and nights out.

Of that, about £27bn will go on presents alone, with the average person expecting to spend £514 on gifts.

Across the six-week festive trading window from mid-November to the end of December, total retail sales are forecast at around £91bn, a 3.2% rise on last year, meaning that a month and a half at the end of the year now carries a disproportionate share of consumer spending.

The retail sector is the most visible beneficiary, generating £115bn of economic output in 2024, around 4.4% of total GDP, with sales worth £517bn and around 2.6 million people employed across more than 300,000 businesses.

Yet overall growth remains anaemic with retail sales volumes increasing by just 0.7% in 2024 after two consecutive years of decline.

Footfall figures underline how hard retailers must work to capture that spend and across 2024, UK shopper numbers were 2.2% lower than the previous year, the sharpest fall since the pandemic.

In the final so-called golden quarter, footfall dropped 2.5% year-on-year which helps explain the heavy discounting we see throughout November and December.