Photographer: Chris J. Ratcliffe / Bloomberg
Photographer: Chris J. Ratcliffe / Bloomberg
UK retail sales rose less than expected in December, adding to evidence that a series of Covid-19 locks are slowing the economy down.
Sales in stores and online rose 0.3% after declining in November, the Office for National Statistics said Friday. That is a percentage point less than economists expected. From a year earlier, sales rose 2.9%.
The report casts doubt on the strength of the economy during the third round of restrictions that began this month. While the virus may be causing the seasonal fluctuation of the figures, December and the holiday buying season are crucial for sellers.
The pound fell 0.5% to $ 1.3667 as of 7:42m in London.
Clothing sales rose sharply in December, while supermarkets and department stores declined. The fall in retail sales will drop 0.02 percentage points off total output in the fourth quarter, the ONS said.
Online sales in 2020 were up 46.1% on value, the biggest gain since 2008.
After some rest in early December, Prime Minister Boris Johnson tightened the rules again in the middle of the month and then suspended it nationally in January, endless in sight. That ended a turbulent 2020 that wreaked havoc on traditional retailers Arcadia Group Ltd. but they picked those that traded online like Amazon.com Inc.
Other data this week has painted a bleak picture of consumer spending, which is a key driver of UK growth. The latest lockdown marks another sharp downturn this year following the economic downturn in three centuries.
In another sign of the economic crisis ahead, a separate report showed that the urgent cost of supporting the UK through the pandemic pushed the country’s budget deficit to 270.8 billion pounds higher in the first nine months of the fiscal year. Chancellor of the Exchequer Rishi Sunak will set out plans in his budget in six weeks’ time to order the return of the UK treasury, according to someone familiar with the matter.
Pandemic costs
The UK plans to borrow 20% of GDP in 2020-21
Source: Office for National Statistics
Consumer confidence declined this month as Britons became more optimistic about their own financial outlook, according to a study by GfK. On Thursday, the ONS said purchases with credit or debit cards fell 35% below pre-pandemic levels in the second week of January. The number of sellers in stores last week was one-third of where it was a year ago.
The economy may see a sharp rebound when it reopens. Central bank chief economist Andy Haldane expects a jump before the middle of this year when vaccines against the virus get caught.
– Supported by David Goodman, Lizzy Burden, and Andrew Atkinson
(Pounded updates in fourth paragraph)