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Retailers look to new year with confidence

Rising pay ‘should help fuel high street optimism’

shoppingSteadily rising pay packets are a symbol of hope for the high street as retailers look to the new year in a more confident mood than for several years.

David Lonsdale, director of the Sottish Retail Consortium, has mirrored a statement from top fashion chain Next this morning that trends appear to be moving in favour of shopping as consumers develop a stronger feelgood factor.

In his New Year Message Mr Lonsdale, says the past year has been challenging but retailers were cautiously optimistic.

“This is borne out by SRC’s suite of Scottish surveys – on sales, footfall and vacancies – which are generally pointing in a more favourable direction of late. Recent news on employment levels, population growth and rising household incomes is similarly encouraging and bodes well for 2015.”

Next issued a trading statement today in which it said the economic outlook for the UK consumer looks “relatively benign”.

It added: “Low inflation, an end to real wage decline, healthy credit markets and strong employment all paint a somewhat more positive picture than recent years.”

Mr Lonsdale added that the industry will be looking keenly at the impact of the UK General Election and how that might affect economic decision making and confidence.

“Closer to home and as a result of the 2012 Scotland Act and the recent Smith Commission Agreement, the Scottish Parliament is set to exert significant influence over take home pay and disposable incomes over the coming years,” he said.

“This coming year will see the first big decisions taken at Holyrood on the amount of tax each of us will pay in future, when income tax rates and bands are set ahead of the tax being devolved in Spring 2016. The First Minister has also pledged to replace council tax, with a commission being set up to examine alternatives to the tax due to report later in 2015.

“It will be crucial that our politicians seize on these reforms to positively help the economy. Decisions on personal levels of taxation affect the cost of living and the amount of money in people’s pockets and we would caution against any moves which would mean people in Scotland paying more in tax than those elsewhere in the UK.”

Next, which is traditionally one of the first companies to report a post-Christmas update, said it remains “very cautious” on sales budgets for the year ahead.

“In Spring and Summer the company will face very tough comparative numbers.  As we pointed out in our September Interim Announcement, during the first half of 2014 sales were significantly assisted by unusually warm weather. There is potential upside in the second half as our sales comparisons weaken, although uncertainty in the UK political outlook and turbulence in the international economy present potential downside risks.

“We are currently budgeting for full price sales growth in 2015/16 to be between +2.5% and +7.5%, with the first half expected to perform at the lower end of the range.  Profits are expected to grow in line with sales.”

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