In Brief

Sales surge dampens fear of UK recession

Even department stores saw an increase in sales last month as consumers appear unfazed by Brexit uncertainty

A surprise surge in online and high-street sales last month looks set to return the economy to growth, and in so doing help the UK dodge a recession this year.

Data released last week showed that the UK economy contracted in the second quarter for the first time since 2012 and “economists looked to the retail sales data for clues for the strength of the economy at the start of the third quarter” says the BBC.

Surprisingly, monthly retail figures from the Office for National Statistics showed sales rose 0.2% - defying forecasts for a 0.2% fall.

While the ONS data showed online sales recorded a 6.9% jump in the month - the biggest rise for three years – helped in part by Amazon Prime Day, the UK’s beleaguered high street retail sector also saw a growth in sales, with department stores recording their first increase this year.

Some economists have said the figures demonstrated that consumers were not fazed by the imminent Brexit deadline, while “others have said consumer spending also got a lift from the heatwave in July, and were sceptical that consumers would keep spending as much, as the 31 October Brexit deadline moved closer” reports The Guardian.

The answer, as usual, appears to be somewhere in between. “To be sure, there were a couple of special factors that explain why spending, after a bumper June, was again solid in July,” says Larry Elliott in The Guardian. “That said, though, there are also underlying reasons why spending is holding up” he adds, citing record employment and faster wage growth.

Whatever the reason, “shoppers spent so vigorously last month that the economy is set to return to growth, dodging recession despite the pressure from the US-China trade war and the risk of a ‘no deal’ Brexit”, says Tim Wallace in The Daily Telegraph.

While the surge in retail sales relied in part on heavy discounting and food sales slipped and household goods shops also struggled, “nonetheless the overall improvement in sales indicates the strong jobs market and rising incomes are giving the economy more support, boosting domestic demand even as exports struggle and businesses hold off investment in the face of intense political uncertainty”, he adds.

Looking to the autumn Gabriella Dickens, the assistant economist at Capital Economics, predicted household spending would hold up as long as a no-deal Brexit could be avoided.

“The outlook further ahead depends on what happens with Brexit. If there is a no-deal Brexit, consumer spending growth would probably fall,” she said.

Recommended

Ikea and Aldi plug into gaming and esports market in lockdown boom
The 2018 TwitchCon esports event in California
In Focus

Ikea and Aldi plug into gaming and esports market in lockdown boom

Tories praise Sunak’s ‘balancing act’ as tax rebellion fizzles
Rishi Sunak presents a post-budget press briefing.
The latest on . . .

Tories praise Sunak’s ‘balancing act’ as tax rebellion fizzles

In numbers: Rishi Sunak’s spring budget
Chancellor Rishi Sunak poses with the Budget Box outside 11 Downing Street
In Brief

In numbers: Rishi Sunak’s spring budget

Spring budget: predictions and major talking points
Chancellor of the Exchequer Rishi Sunak poses with the Budget Box outside 11 Downing Street
Why we’re talking about . . .

Spring budget: predictions and major talking points

Popular articles

Best TV crime dramas to watch in 2021
James Nesbitt stars in Bloodlands
In Depth

Best TV crime dramas to watch in 2021

Quiz of The Week: 27 February - 5 March
Prince Harry and Meghan Markle during a visit to Northern Ireland in 2019
Quizzes and puzzles

Quiz of The Week: 27 February - 5 March

Ten Things You Need to Know Today: 6 March 2021
10 Downing Street
Daily Briefing

Ten Things You Need to Know Today: 6 March 2021