Mixed Signals Emerge in UK Economy as Consumer Activity Cools and Redundancies Rise

The Office for National Statistics has published its latest real-time indicators on economic activity and social change across the UK, revealing a complex picture of an economy experiencing slowdown in consumer demand whilst facing rising redundancy pressures in key sectors. The data, released on 19 February 2026, provides early experimental insights into retail behaviour, employment trends, energy prices and broader economic conditions from January 2026.

Consumer spending patterns have become noticeably weaker, with retail footfall falling sharply across most of the country. The Office for National Statistics reported that retail footfall decreased by 4% in January 2026 compared with the same month a year earlier, marking a significant pullback in high street activity. Month-on-month, footfall also fell compared with December 2025, suggesting that the traditional post-Christmas retail surge failed to materialise this year.

The decline was widespread, affecting all 12 UK regions. Northern Ireland recorded the largest monthly fall at 21%, whilst Scotland saw a 16% decrease. Year-on-year comparisons were similarly challenging, with Wales experiencing the largest annual decline at 10% and Northern Ireland down 9%. London provided the only bright spot, registering a modest 1% increase in retail footfall when measured against January 2025 figures.

However, the consumer spending picture is not uniformly negative. Whilst footfall has weakened, consumer spending itself remained flat month-on-month but showed growth compared with January 2025. This apparent contradiction reflects a shift in consumer behaviour rather than wholesale collapse in spending. Rising inflation continues to inflate the nominal value of transactions, and more consumers are moving away from cash payments towards card-based transactions, which may artificially inflate spending figures.

The labour market has presented more concerning signals. The number of potential redundancies increased sharply, rising 29% in January 2026 compared with December 2025 and 22% compared with January 2025. The Office for National Statistics noted these figures are compiled from Insolvency Service HR1 forms, which capture advance notifications of potential job losses. This substantial increase suggests mounting employer caution about workforce levels heading into 2026.

Two sectors accounted for more than half of all redundancy notifications. The Distribution, Hotels and Restaurants industry—encompassing retail, hospitality and logistics—reported a dramatic 272% surge in potential redundancies between December 2025 and January 2026, whilst the Banking and Finance sector recorded a 101% jump. These two industries alone represented 55% of all redundancy notifications across the economy.

When measured year-on-year, Distribution, Hotels and Restaurants showed the sharpest increase at 67%, followed by Banking and Finance at 37% and Energy and Water at 30%. This concentration in particular sectors suggests targeted workforce restructuring rather than broad-based employment weakness across the economy. Some sectors bucked the trend: Transport and Communication saw redundancies fall 17% year-on-year, Manufacturing dropped 9%, and Other Services fell 14%.

Construction and Manufacturing both saw redundancy notifications decline in January compared with December, falling 55% and 29% respectively. This reversal follows increases in both sectors during December 2025, indicating potential volatility in redundancy reporting rather than sustained improvement.

Energy markets showed fresh pressures emerging. Wholesale gas and electricity prices increased during January 2026, driven by a colder-than-average start to the year combined with supply constraints. Higher demand during winter months typically pushes energy prices upward, but the additional supply-side constraints suggest tightness in energy markets that may eventually feed through to household and business bills.

The Office for National Statistics emphasises that these real-time indicators are experimental, created using rapid response surveys, novel data sources and experimental methods. The statistics are not yet designated as official statistics and remain under development. The ONS notes that once developments are complete, statistics will be reviewed by the Statistics Head of Profession to determine whether they meet standards for publication as official statistics, or whether further development is required.

The mixed signals emerging from these indicators reflect broader economic uncertainty. Whilst consumer spending shows resilience in nominal terms, the weakness in footfall suggests consumers are being more cautious about discretionary purchases. The sharp rise in redundancy notifications, particularly in hospitality and financial services, indicates that employers are responding to economic headwinds by reducing headcount.

Key Takeaways

• Retail footfall declined 4% year-on-year in January 2026, with all regions except London experiencing decreases
• Potential redundancies jumped 29% month-on-month and 22% year-on-year, concentrated in Distribution, Hotels and Restaurants (up 272% monthly) and Banking and Finance (up 101%)
• Wholesale energy prices rose in January 2026 due to increased winter demand and supply constraints

What This Means for Kent Residents

For Kent residents and businesses, these figures present mixed implications. The weakness in retail footfall will concern many high street traders across Kent’s towns and shopping centres, suggesting consumer caution at a time when retailers are already facing elevated operating costs and staffing pressures. However, the strength of card-based consumer spending year-on-year offers some reassurance that household spending power has not collapsed entirely.

The jump in redundancies in Distribution, Hotels and Restaurants is particularly relevant to Kent, given the significant hospitality sector presence in coastal towns like Margate, Folkestone and Deal, plus the substantial logistics and distribution operations clustered around the ports of Dover and Folkestone. Residents working in financial services should note the 37% year-on-year increase in redundancies within that sector. As energy prices begin to creep upward again, Kent households and small businesses should prepare for potential bill increases in the coming months.