Labour has been accused of sounding a £1billion death knell to the High Street, with shoppers expected to shun today’s Boxing Day sales.
Struggling retailers will lose out on the much-needed revenue as consumer confidence collapses amid Rachel Reeves‘ tax bombshells.
Figures from Barclays show that 26 per cent of Britons are expected to hunt for bargains today– down from 28 per cent in 2024 – as Labour’s cash grabs begin to bite. The bank predicts the country’s ailing high streets will net £3.6billion from Boxing Day shoppers – £1billion less than last year.
The drop in high street footfall is due to stretched household budgets, with 69 per cent of people saying cost pressures will impact their spending this year, up from 47 per cent in 2024.
The Conservatives and Reform UK blamed Labour for presiding over a ‘flatlining economy and collapsing consumer confidence’.
Shadow business secretary Andrew Griffith said: ‘Under Labour, Christmas has been reduced to a time for stocking up on discounted essentials rather than celebrating with family and friends.
‘With the Government presiding over a flatlining economy and collapsing consumer confidence, shoppers are tightening their belts and retailers are paying the price.’
Reform deputy leader Richard Tice said: ‘This government came in promising to get the cost of living under control. Almost two years later, household bills have soared, taxes have skyrocketed, and economic growth has flatlined.
‘It’s no surprise that shoppers are feeling the pinch and choosing to stay at home instead of supporting high street businesses this Boxing Day.’
Struggling retailers will lose out on the much-needed revenue as consumer confidence collapses amid Rachel Reeves’ tax bombshells
Reform deputy leader Richard Tice said: ‘This government came in promising to get the cost of living under control’
It comes after Ms Reeves clobbered households and businesses with an extra £66billion of taxes since she became Chancellor last year, including a £25billion raid on employers’ National Insurance contributions.
A hike in the minimum wage, extending a stealth tax on pay rises that will force more than 8.9million people into paying the higher rate of income tax by 2030, botched business rates reforms, and new workers’ rights have also hit businesses and damaged consumer confidence.
The slide in Boxing Day sales is another troubling sign for struggling high streets, after data last week showed that retailers have already been quieter than expected in the run-up to Christmas.
Figures from MRI Software confirmed that visits to high streets in the week before Christmas were down by 5.6 per cent on last year.
Sales are expected to fall further, with January predicted to be the weakest month in four years – since March 2021, during the pandemic – according to the Confederation of British Industry’s survey of retailers.
The bleak outlook comes as unemployment rises to a five-year high of 5.1 per cent and the Bank of England forecasts that GDP growth will flatline in the fourth quarter of this year.
The figures from Barclays show that, of those who do plan to splurge, half plan to brave the crowds on the High Street, with the rest seeking bargains online.
Those who go shopping have set an average budget of £253, an increase of £17 from last year.
Across the full festive sales period, 44 per cent of Britons say they will go shopping, with the vast majority planning to do at least some of their bargain-hunting in-store.
Chief on shoppers’ wish lists are clothes, shoes and accessories, chosen by 37 per cent, followed by food and drink, beauty and homeware.
A quarter say they will buy only what they consider to be essentials. Nearly half of those planning to buy beauty and skincare products will use the sales to stock up on their usual products at a lower price.
Karen Johnson, head of retail at Barclays, said: ‘Shoppers have demonstrated just how cost-conscious they are throughout 2025, and we expect that we’ll see this play out during the Boxing Day sales.’
Two in five said they preferred online shopping. Retailers would need to offer in-store-only discounts or free items with purchases to entice more shoppers, according to Barclays.
For those who prefer to shop from the comfort of their home, 37 per cent are turning to artificial intelligence to hunt for deals, research products and compare prices. This figure rises to 53 per cent for 18 to 34-year-olds, although half worry that the tools may encourage overspending.
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Chief on shoppers’ wish lists are clothes, shoes and accessories, chosen by 37 per cent, followed by food and drink, beauty and homeware
Across the full festive sales period, 44 per cent of Britons say they will go shopping, with the vast majority planning to do at least some of their bargain-hunting in-store
Ms Johnson added: ‘Despite this, many still enjoy the social and sensory experience of visiting stores. Those that do hit the high streets might benefit both from bigger budgets, perhaps having held out for the sales, and potentially less competition, from fewer sales shoppers.
‘Boxing Day is still a pivotal moment for retailers, fuelled by Christmas nostalgia, but it has evolved to reflect modern consumer demands. This year, we’re likely to see a balanced blend of online convenience, experiential retail and increasingly mindful purchasing.’
Delivering her Budget last month, Ms Reeves said she was ‘asking ordinary people to pay a little bit more’, but the biggest burden would fall on those ‘with the broadest shoulders’, through higher taxes on property and savings.
But Black Friday deals failed to tempt shoppers, with sales unexpectedly falling for the month by 0.1 per cent, the Office for National Statistics revealed.
Danni Hewson, head of financial analysis at A J Bell, blamed rumours of potential tax hikes, saying they had ‘unnerved consumers at the very peak of the festive shopping period’, and that customers ‘continued to display an abundance of caution’.
Richard Lim, of Retail Economics, added: ‘For households, the cost of living still remains the biggest challenge. Although we’ve seen falling inflation over the last four years, we haven’t seen falling prices.’
A government spokesman said: ‘Breathing life back into our high streets is a vital part of bringing economic growth to every part of the UK, and we are committed to working in partnership with businesses and local communities to deliver this and back retail.
‘We’re ensuring there is a level playing field between online and high street businesses, stamping out the scourge of late payments which disproportionately impacts small businesses, tackling retail crime, and are creating a fairer business rate system to incentivise investment, tackle empty properties and support entrepreneurship.’
