By Max Clarke
Retail figures for December published today by the Office for National Statistics (ONS) show a 0.8% drop in UK sales.
Commenting on the figures are David Kern, Chief Economist at the British Chambers of Commerce (BCC), and Jeremy Cook, chief economist at World First.
“Ever since the first snowflake descended on the UK we knew that the impact on the retail sector was likely to be significant.
“The 0.8% fall makes it the worst December figure on record at a time when the High St was so in need of a strong Christmas. Given that consumer spending is such a huge part of UK GDP sets us up for a poor Q4.
“Sterling is losing ground against all currencies following the announcement.” Said Jeremy Cook.
David Kern commented:
“The fall in retail sales was largely expected, mainly because of the severe weather conditions in December. But it is too early to know whether consumers brought forward any purchases ahead of the VAT increase. Overall, the figures indicate that retailers faced intense pressures ahead of 2011 when the deficit-cutting programme was expected to take hold.
“The pressures facing businesses and consumers will intensify and with prices increasing faster than wages disposable incomes will be squeezed further. In this instance, it would be wrong to raise interest rates until the initial impact of the austerity package is absorbed. But keeping rates low is not enough. It is equally important to create conditions where retailers and other businesses are able to create jobs and drive growth.”