Action needed to prevent ‘spending paralysis’

UK retail sales enjoyed a modest rise in July but the British Retail Consortium has warned the growth comes against a backdrop of economic uncertainty.

Sales values were 0.6% higher on a like-for-like basis from July 2010, when sales had risen 0.5%. On a total basis, sales were up 2.5%, against a 2.6% increase in July 2010.

Non-food non-store (internet, mail-order and phone) sales growth slowed after June’s clearance-led uplift. Sales were 9.6% higher than a year ago, compared with 11.5% in June and 11.3% in July 2010.

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Stephen Robertson, director general of the British Retail Consortium, said the latest figures were a modest improvement on recent months but overall conditions remained very difficult for retailers.

“When you take into consideration inflation and January’s increase in VAT, 2.5% growth effectively means people are buying fewer goods,” he said.

Robertson said an unprecedented number of promotions during July came at the expense of margins for many retailers, leading to minimal growth of non-food items.

“Growing fears of a global economic slowdown and a sovereign debt crisis have sent shockwaves through financial markets,” said Robertson.

“Policymakers in Europe and the US must act quickly to implement a coordinated and credible strategy to reduce public sector deficits while supporting growth. Business and consumer confidence needs to be restored quickly before spending paralysis sets in,” he concluded.



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