British retail spending shrugs off Brexit shock
BRITISH retail spending bounced back last month as sales promotions and good weather outweighed concerns that Britain’s vote to leave the European Union would deal an immediate hit to the economy.
Official data has been scarce since the June 23 referendum, but most business and consumer surveys have pointed to a sharp slowdown, prompting the Bank of England (BoE) to cut interest rates last week for the first time since 2009 and restart quantitative easing.
However, British retailers including Tesco, Next and John Lewis say they have not so far been affected by the shock referendum result.
According to the British Retail Consortium (BRC), retail spending in July was 1.9% higher than a year earlier, the biggest rise in six months and up sharply from 0.2% growth in June, when bad weather added to uncertainty around the vote.
“Little has materially changed for most UK households in the wake of June 23, so it is not surprising to us that sales are simply responding to their normal underlying drivers,” BRC chief executive Helen Dickinson said.
The BoE and others expect business and housing investment to slow first, and for consumer spending to hold up until households feel the impact of higher inflation from the collapse in sterling and a possible rise in unemployment.
Monthly data can also be volatile, economists warn, and the true impact of Brexit on consumer spending is still to emerge.
The BRC data showed that on a like-for-like basis, sales were up 1.1% on the year last month, compared with a 0.5% dip in June.
The robust performance tallied with data from credit card company Visa, which showed that consumer spending picked up last month.
Research by Barclaycard published yesterday showed that consumers were feeling more cautious.
Retailer Next, however, believes that not all companies will be hit equally, suggesting Britons could shy away from expensive purchases such as cars and holidays, and spend money on clothes and smaller items instead. – Reuters