Rachel Reeves’ Budget, with its blend of tax increases and commitment to increased public spending, is partly to blame for sluggish Boxing Day sales, a leading economist has claimed.

Julian Jessop’s concerns have been reinforced by the findings of a new survey suggesting the number of UK retailers on the brink of collapse has surged by a quarter in recent months.

The noticeable absence of queues during this year’s sales can partly be attributed to the growing dominance of online shopping – but economic factors are also likely to have played a significant role in dampening consumer enthusiasm for in-store shopping.

Higher taxes, particularly on businesses, including the increase in National Insurance Contributions for Employers, have raised concerns about potential price increases and economic stability.

Such worries may have led consumers to be more cautious with their spending, opting to save rather than splurge during the sales. Queues outside big stores such as Selfridges and Harrods appear to be a thing of the past.

Mr Jessop, Economics Fellow at the Institute of Economic Research, posting on X, commented: “My takeaway – I’d be wary of reading too much into a single day’s footfall, but this is consistent with other evidence that consumers are reluctant to spend in the wake of the Budget.”

The latest Red Flag Alert report from insolvency specialist Begbies Traynor found 2,124 UK retailers were in critical financial distress between October and December 16.

This was 25% higher than in the previous three months, between July and September, although it marked a slight decline of nearly 1% compared with the same period a year ago.

The latest figures include a 29% quarter-on-quarter surge in general retailers on the brink of collapse and a 17% jump among food and drug retailers.

Online sellers, takeaway food shops, mobile food stands, and convenience shops were among the businesses struggling the most.

Julie Palmer, a partner at Begbies Traynor, said: “This year has highlighted the resilience and adaptability of some UK retailers, but the sector remains under significant strain.

“Clearly, some retailers have found ways to manage financial pressures effectively, but others, particularly in general retail, are struggling under the weight of rising operational costs and squeezed consumer spending.”

The report from Begbies follows data from MRI Software showing that Boxing Day shopper footfall was down 7.6% across all UK retail destinations compared with last year.

However, it said this largely reflected a shift to online shopping, with analysts expecting consumers to do the majority of their sales shopping online this year.

According to the latest official figures, clothing and footwear retailers had a weaker November than in previous years, with sales volumes declining by 2.6% for the month.

Homebase was one of the household names to announce it had called in administrators last month after being hit hard by an “incredibly challenging” three years for the DIY sector.

Ms Palmer said this poorer performance in “traditionally a critical month for the sector, further underscores the tough trading conditions, as consumers hold off on purchases amid low confidence and rising prices”.

She added: “Adding to this uncertainty, the measures announced in the Autumn Budget, including the planned increase to employers’ national insurance contributions, will significantly dial up the challenges faced by these businesses.

“These changes, alongside increases to the minimum wage, will negatively impact cash flow and, consequently, we expect elevated insolvency levels across this sector during 2025.”

Ms Palmer said that the marginal year-on-year decline in the number of retailers facing critical distress provided a “glimmer of home” with some businesses finding ways to adapt to financial pressures and changing shopping behaviours.

But she said others were more “vulnerable” to online competitors such as Temu and Shein, which have drawn in swathes of shoppers attracted to low-cost fast fashion.

Meanwhile, 28,747 retail businesses in the UK were also in significant financial distress over the latest quarter, down from 34,494 during the same period last year.

Chancellor Ms Reeves delivered her Budget statement on October 30.

I asked in November if she could confirm there would be no more big tax raises for business, and she said: “I faced a problem, and I faced into it. We’ve put our public finances back on a firm footing, and we’ve now set the budgets for public services for the duration of this Parliament.

“Public services now need to live within their means because I’m really clear, I’m not coming back with more borrowing or more taxes.”