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U.K. retail sales unexpectedly rose in March, surprising economists and offering a rare bright spot amid growing concerns over the impact of U.S. President Donald Trump’s aggressive trade policy on global sentiment.
According to data from the Office for National Statistics (ONS) released Friday:
- Retail sales rose 0.4% month-on-month in March (vs. -0.3% expected), though slower than February’s upwardly revised 0.7% gain.
- On an annual basis, sales climbed 2.6%, surpassing the expected 1.8% and February’s 2.2% growth.
The figures offer reassurance about consumer resilience, even as sentiment has deteriorated sharply. A British Retail Consortium (BRC) survey released Thursday showed its consumer sentiment index fell to -48 in April, the lowest in over a year, from -35 in March.
The drop in sentiment followed the early April announcement of sweeping U.S. tariffs, including minimum 10% levies on most major trading partners — measures that have rattled global markets and raised fears of a wider economic slowdown.
Tariffs Add Pressure to U.K. Policymakers
U.K. Chancellor Rachel Reeves is set to meet U.S. Treasury Secretary Scott Bessent later today to discuss possible exemptions or adjustments to the U.S. tariffs, as the U.K. seeks to limit the economic damage.
At its March meeting, the Bank of England held its key interest rate at 4.5%, citing continued inflation pressures. But with a weakening outlook, markets are now pricing in a rate cut in May, particularly after the IMF forecast U.K. inflation to remain the highest among advanced economies this year at 3.1%.
The IMF also downgraded the U.K.’s 2025 growth forecast to 1.1% from 1.6%, blaming the global fallout from U.S. trade tariffs.
The unexpected strength in retail sales offers short-term relief, but the broader economic outlook remains fragile. With consumer confidence plunging and external risks escalating, the Bank of England faces increased pressure to ease policy in the coming months. All eyes are now on U.S.-U.K. trade talks and upcoming central bank guidance.
