UK Consumer Spending Slows for Second Successive Month

By Jake Rickman​

What do you need to know this week?

In a joint report compiled by professional services firm KPMG and the British Retail Consortium, consumer spending is down for the second month in a row in April.

In effect, retail companies are in a double bind, facing both declining revenues and increased prices.

Why is this important for your interviews?

One of the most common questions interviewers like to ask applicants is, “Tell me about a relevant commercial issue and why it impacts us as a law firm.” In this context, you should consider how the issue is relevant for clients and how it is relevant for the law firm interviewing you.

One way to ensure you hit both points is to craft your answer in the form of a simple argument with a beginning, middle, and end. In keeping with the narrative theme, the argument should have a main character, which we will call the situation.

When choosing a situation, it is easy to try and find something obscure to make you stand out, like trends in the crypto-markets. But keeping up with developments in macro-economic trends like declining consumer spending can help you focus your analysis while also giving you the flexibility to tailor the answer to your interviewer.

To structure your answer, you may want to start by setting out the context: how did we get here? The middle portion of your answer could then consider a probable outcome of the present situation. Finally, apply your analysis first to the client, ensuring you are clear about which kind of client you have in mind (is it a single company, or a group of companies operating in the same sector or market?). Then, explain what this first instance analysis means for law firms, perhaps by identifying how it creates both a threat and an opportunity.

Your answer should be succinct. For example:

“I read about a report this week: consumer retail spending has slowed two months in a row, largely because of sustained inflation which is eating away at our disposable income. My understanding is that this is largely owed to supply chain issues related to pandemic lockdowns and magnified by the war in Ukraine, which has driven up global prices and appears to be sustained.

“The concern is that if inflation persists, consumer-facing retailers and manufacturers — many of your corporate clients — will see declining revenues in conjunction with increased prices and be less inclined to expand their operations. In aggregate, this could even spur a recession.

“More immediately, this will result in fewer transactions for [law firm] to advise on. But the firm’s advisory services, including pensions and employment, may be increasingly engaged as clients look to minimise costs through reorganisations and restructurings.”

Of course, you will need to tailor your argument to the firm by drawing on particular deals it has been engaged with. You cannot be formulaic and try and recite something from scratch.

Likewise, be prepared to unpack your argument: for instance, what is the connection between the supply chain and inflation?