Brexit uncertainty affects retail sales

RETAIL sales in the UK have grown but Brexit uncertainty could lead to a fall.

The latest economic statistics from the CBI Distributive Trades Survey show a mixed fortune for British business.

Falling sales in clothing and department stores show “challenging underlying conditions” while the Brexit extension has provided a temporary economic crisis.

In a survey of 110 firms, retail sales grew for the first time since November 2018 in the year to April.

Orders placed on suppliers also grew and are expected to pick up further in the month ahead, with sales volumes also set to see somewhat faster growth.

However, while growth in online sales improved slightly, it remained far below its longrun average.

The picture for sub-sectors within retailing was mixed. Grocers and other normal goods (such as jewellery, flowers) were the two primary drivers being this month’s sales growth.

While grocers returned to growth this month, after seeing broadly flat sales in March, the rise in volumes was still below the long-run average. Furthermore, other sectors fared worse, with sales falling notably in clothing and department stores.

Elsewhere, wholesalers reported their weakest growth since June, with a decline in sales expected in the year to May – if realised, this would mark the fastest fall in six years. Motor traders also saw a return to growth in sales volumes, but expect a small fall next month.

The survey showed further signs of stockpiling, with motor traders’ stocks relative to expected demand rising to their highest since December 2008.

Rain Newton-Smith, CBI Chief Economist, said: “It’s encouraging to see retailers with more of a spring in their step than in recent months.” The recent pick up in real wages is a welcome support to the sector, making the pound in people’s pockets stretch that bit further. “However, this month’s sales growth will have been distorted by the later timing of Easter, and falling sales in clothing and department stores underline how challenging underlying conditions remain. “The Brexit extension means an economic crisis has been avoided, for now. However, uncertainty continues to drag on consumer confidence, and many retailers report an impact on their sales. “Politicians now owe it to the country – its businesses and people – to come together in a total spirit of compromise, setting aside all party political lines, and agree a way forward to avoid a no deal Brexit.”