Switching on the Christmas lights in London's world famous Oxford Street is usually a jubilant time for U.K. retailers, but this year the holiday season is full of uncertainty that could roll on into the new year.
"Retailers are more paranoid this year than they usually are," Keith Richardson, head of retail for Lloyds Bank, told CNBC over the phone Tuesday.
The season is traditionally important for retailers, given their sales volume tends to go up significantly, thus boosting their yearly performance. But this year "there's an underlying moment," Richardson said, a "high degree of nervousness that is making planning even more difficult."
The U.K. economy is experiencing a unique situation. Though it is close to full employment, which technically means that consumers are in a position to spend; inflation is relatively high, wage growth has stagnated and uncertainty over Brexit is making people reluctant to spend, mainly when it comes to big-ticket items, such as cars.
Data released Tuesday showed U.K. retail sales tumbling in October as consumers opted for outdoor experiences rather than shopping. According to the British Retail Consortium, in-store sales of non-food items dropped 2.9 percent in the three months to October and 2.1 percent from a year ago. Online sales were also down.