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UK retail sentiment sees steepest decline since financial crisis

U.K. retailers expect the sharpest decline in business activity since the financial crisis to hit in the coming months amid fears of a no-deal Brexit, according to data from the Confederation of British Industry's August distributive trades survey.

Of the retailers surveyed, 10% reported an increase in sales volumes, while 58% said they had fallen, yielding a net balance of negative 49%.

Though retail sales fell in the year to August at their fastest rate since the financial crisis, sales were only marginally below average for the time of the year. However, negative investment intentions and a decline in employment for the 11th consecutive quarter confirm that conditions have deteriorated further.

Two percent of retailers expect conditions to improve over the next three months, while 27% see a further decline, yielding a net balance of negative 25%.

"It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy," Confederation of British Industry Deputy Chief Economist Anna Leach said.

Orders fell at their fastest rate since December 2008 and are expected to fall further in September. Wholesale sales volumes fell at their quickest rate since April 2013, and motor traders saw dwindling sales for the fourth consecutive month.

"We expect the economy to grow modestly further ahead, though a no-deal Brexit would likely hit activity and financial markets significantly," the Confederation of British Industry said.