Retail: Solid Performance Kindles Hopes for Growth

Retailers continue to discount during key pre-Christmas season

Retailers continue to discount during key pre-Christmas season

UK retailers have been performing unexpectedly well in recent months, providing the first bit of evidence against of analysts who predict that Britain will enter a new recession.

Car production, which has been lagging globally, also gave an unexpected rise in November.

Grim forecasts

Despite the unexpectedly good results, the Confederation of British Industry’s November survey showed a fall in factory orders.

Experts predict more dangers like this ahead as the struggling UK economy tries to revive itself amidst plummeting growth forecasts.

Much of the danger to Britain’s retail and manufacturing sectors lies with the debt crisis in the eurozone, which is Britain’s main trading partner.

Slow in-country demand and fewer orders for the export sector have made economists slash growth forecasts in recent weeks, with many predicting a new recession within a year.

In addition to the drop in factory orders, mortgage lenders delivered the bad news that more Britons are expected to lose their homes next month.

Critics say that the economy has failed to recover despite efforts from the Bank of England to stimulate growth. Record-low interest rates are meant to increase economic activity, while the Bank has also pumped cash into the economy in the form of asset purchases.

The failures of these measures are often attributed to lack of help from the UK government, which is committed to its flagship austerity drive despite the resulting economic burdens it produces, such as public sector job cuts.

Key holiday period

The run-up to Christmas, a key profitable period for retailers, has seen retailers discount up and down the high street in an attempt to attract more business.

However, the pressure on retailers is only intensifying as consumers are holding back on spending while price rises outgrow wage increases.

Consumer confidence and morale is also at a record low amidst growing unemployment and a growing squeeze on household budgets.

Still, the Office for National Statistics reported that retail sales volumes rose 0.7% in the last quarter when compared to the three months before.

These figures, while seemingly low, are the strongest gain for the UK retail sector since August 2010.

Predictably, the good news is followed with bad, as November saw a monthly drop of 0.4%.

Economists say that the volatility surrounding markets and squeeze on consumers leaves the outlook uncertain for the economy.

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