Shopping crisis sparks fears of fresh recession

Retailers hit as shoppers stay away

THE number of people hitting the shops in Scotland fell again last month, increasing fears that the country is heading for a recession.

New figures from the Scottish Retail Consortium (SRC) show footfall fell 1.9 per cent in July, having dropped 3.3 per cent in June.

It suggests confidence is low among consumers, which is hurting retailers in the usually busy summer holiday months.

There was some good news, with the rate of empty premises on Scots high streets falling, even as the UK rate rose, but that will not be enough to ease the concerns of business leaders. Last week they demanded Nicola Sturgeon scrap her £62.4billion business rates supplement, controversially introduced in April.

The SRC also urged her to rethink personal tax hikes – such as ending the council tax freeze, and refusing to pass on the UK’s tax cut for higher rate income taxpayers – to ease the pressure on household budgets.

David Lonsdale, director of the SRC, said: ‘These results are something of a mixed bag, with a welcome reduction in the shop premises vacancy rate unfortunately coupled with shopper footfall flagging once again.

‘Indeed shopper footfall in stores dipped for a second successive month and at a faster rate than the average over the past three months, pointing to a continuing fragility in demand and the ongoing popularity of online retailing.

‘The second quarterly improvement in a row in the vacancy rate is encouraging, though it remains to be seen whether this reflects units being taken up on a temporary or more sustained basis.’

He added: ‘These are testing times for the industry which is Scotland’s largest private sector employer, and the Holyrood government and MSPs can assist by taking tangible action in the upcoming Scottish Budget.

‘Retailers will be looking for a clear road map for future tax and regulatory changes, a tight lid on personal and business tax rates and charges, and for the scrapping of the Scotland-only rates surcharge on medium and larger sized firms.’

Experts have predicted Scotland will head towards recession – where the economy shrinks for two consecutive quarters – towards the end of the year.

The Scottish Government has tried to blame Brexit for the country’s economic woes, but growth had stalled before the EU vote, and the full impact of the decision has yet to be felt.

Diane Wehrle, marketing and insights director at retail analyst Springboard, said: ‘Unlike the UK, where vacancies increased by 0.5 percentage points to 10.1 per cent, the vacancy rate in Scotland dropped by 0.9 percentage points from a strong level of 8.4 per cent to 7.5 per cent.

‘Not only is this the second lowest level of any area in the UK but it has noticeably improved from a rate of 10.6 per cent in July 2015.

‘But the April to June quarter can prove irregular, as typically post-Christmas pop-ups and temporary stores disappear from the high street.’ A Scottish Government spokesman said: ‘We have a clear focus on supporting business and encouraging economic growth. Our Small Business Bonus Scheme has helped ease the tax burden of thousands of small retailers in high streets up and down Scotland.

‘And just last week we announced a new £100million stimulus package that will keep our economy moving in the current turbulent period.’

‘These are testing times’