Economic Jitters in the UK

The head of major UK retailer Marks & Spencer (M&S), Stuart Machin, has voiced concerns that recent statements from Chancellor of the Exchequer, Rachel Reeves, have amplified customer anxiety over rising living costs. In a pre-budget speech on Tuesday, 4th November 2025, Reeves declined to rule out tax increases, breaking from her party's manifesto pledges and signalling a period of fiscal tightening to address a reported £20-30 billion shortfall in public finances. This has left consumers and businesses in a state of apprehension ahead of the critical Christmas shopping season.

Impact on Retail and Consumer Spending

Machin's comments reflect a broader unease within the UK retail sector as it approaches Black Friday on 28th November, traditionally one of the busiest shopping days of the year. He expressed frustration over the timing of the budget announcement, scheduled for 26th November 2025, stating, “We are all sitting here waiting for the 26th.” The uncertainty is compelling shoppers to plan for a festive season while simultaneously bracing for potential financial strain. Projections for the 2025 Black Friday weekend anticipate UK spending to reach approximately £3.9 billion, a marginal 2% increase from 2024, indicating cautious consumer behaviour.

This cautious sentiment is compounded by M&S's own financial struggles. The retailer recently reported that its profits for the first half of the financial year had fallen by 55.4%, a significant downturn attributed to a severe cyber-attack earlier in the year. The attack led to a 16.4% drop in sales for its Fashion, Home & Beauty division. Underlying pre-tax profits fell to £184.1 million for the six months ending 27th September 2025, down from £413.1 million in the same period the previous year.

Broader UK Economic Context

The Chancellor's pre-budget statements are set against a backdrop of a complex UK economic environment. While the economy showed resilience in the first half of 2025 with 0.9% growth, forecasts suggest a slowdown. Projections for 2026 anticipate more muted growth, with forecasts ranging from 0.8% to 1.1%, partly due to the anticipated tighter fiscal policy. Inflation, which stood at 3.8% in September 2025, is expected to remain above 3% for the remainder of the year before gradually decreasing in 2026.

The Office for Budget Responsibility (OBR) is also expected to release a downgraded forecast for the UK's productivity, which could further impact public finances through lower tax receipts. These economic pressures are forcing the government to consider difficult fiscal decisions, with speculation of increases in income tax or changes to National Insurance contributions.

Relevance for Kenya and East Africa

While the immediate focus is on the UK domestic market, these economic shifts have potential implications for Kenya. The UK is a significant trading partner for Kenya, with total trade between the two nations exceeding KSh 340 billion (£2.1 billion) in the year leading up to the second quarter of 2025, an 11.9% increase from the previous year. Kenyan exports to the UK, which rose by 14.4% in the same period, are dominated by agricultural products such as flowers, tea, and coffee.

A slowdown in UK consumer spending, driven by tax hikes and economic uncertainty, could dampen demand for these Kenyan goods. Reduced disposable income in the UK may lead to consumers cutting back on non-essential items, potentially affecting the floriculture and premium beverage sectors. The stability of the UK market is crucial for the thousands of Kenyans employed in industries that rely on this export relationship. The UK remains one of Kenya's largest foreign investors, with around 150 British companies operating in the country. Any significant downturn in the UK economy could influence future investment flows into Kenya and the wider East Africa region. Kenyan businesses and policymakers will be closely monitoring the UK budget on Wednesday, 26th November 2025, for a clearer picture of the economic trajectory of this key trading partner.