British retail spending bounced back in July as sales promotions and good weather outweighed any immediate concern about the consequences of Britain’s decision to leave the European Union, a survey showed on Tuesday (8 August).
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 June 23’s referendum, the British Retail Consortium said.
On a like-for-like basis – a measure which strips out changes in floorspace and corresponds more closely with retailers’ results – sales were up 1.1% on the year in July, compared with a 0.5 percent dip in June.
The data are in line with figures on Monday from credit card company Visa which showed consumer spending picked up in July, as Britons’ behaviour failed to match a post-Brexit slump in sentiment reported in earlier surveys.
“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,” Helen Dickinson, chief executive of BRC said.
“A heavy month of promotions proved very successful in appealing to bargain-hungry shoppers. The big question for retailers is whether that success can be carried forward into full price sales,” she added.
Official data has been scarce since the referendum but most business and consumer surveys have pointed to a sharp slowdown, prompting the Bank of England to cut interest rates last week for the first time since 2009 and restart quantitative easing.
British retail sales suffered their sharpest monthly fall in six months in June, but stores said bad weather rather than Brexit was to blame, leaving open the question of how big a hit the vote to leave the European Union will deal to the economy.
Tuesday’s figures are some of the first hard numbers on how the economy performed after the referendum.
But economists have warned against using retail sales as a guide to the health of the economy, due to the data’s sensitivity to the weather and because they expect it to lag other drivers of a post-referendum slowdown.
The Bank of England on Thursday slashed interest rates to a record low 0.25 percent and announced a vast stimulus package to combat economic fallout from Britain’s looming EU exit.
The BoE and others expect business and housing investment to slow first, and for consumer spending to hold up until the inflationary effects of sterling’s post-referendum slump and a likely rise in unemployment hit households.
Next year the BoE predicts real-terms household consumption growth will slow to just 1 percent, less than half the rate it forecasts for this year.
Michel Barnier, the former financial services Commissioner with a testy relationship with the City of London, will lead the Brexit negotiations with the United Kingdom, the European Commission announced today (27 July).