As retail slows and global risk rise...
European uncertainty forces CBI to cut growth forecast
It says investment plans are being hit by uncertainty ahead of the EU referendum.
Growth is again expected to be driven by household spending and investment, but the deterioration in the global economic outlook, including weaker prospects for China and other emerging markets, continue to represent major challenges.
The economy saw a softer than expected start to the year, which has contributed to a large part of the downgrade in GDP growth in 2016. The CBI says there are also signs that uncertainty over the outcome of the EU referendum is having a tangible impact on the spending plans of some firms.
It says its central economic forecast was carried out on the basis of Britain remaining a member of the European Union.
Carolyn Fairbairn, CBI Director-General, said: “We expect the UK’s growth path to continue but it is likely to be at a slower rate than previously thought.
“A dark cloud of uncertainty is looming over global growth, particularly around weakening emerging markets and the outcome of the EU referendum, which is chilling some firms’ plans to invest.
“At present, the economic signals are mixed – we are in an unusually uncertain period.”
The CBI believes that the timing of a first rise in interest rates will now be in the second quarter of 2017 (rising to 0.75%) against the backdrop of slower growth.
* Retail footfall performance in Scotland was more disheartening than across the UK, with a drop of 6.2% overall, according to Diane Wehrle, Marketing and Insights Director at Springboard.
“High streets and shopping centres were the culprits, with significant drops in footfall of 9.1% and 7.2 % respectively,” she said, “although these were at least partially offset by a rise of 2.2% in retail parks. O
“On a positive note, despite the poor footfall performance, vacancies fell back to 8.4% from 9.1% in January.”
David Lonsdale, Director, Scottish Retail Consortium said: “These are at best mixed results, with a slight and welcome improvement in the shop vacancy rate greatly tempered by a third successive month of declining shopper footfall numbers. Indeed, April saw an acceleration of the recent downwards trend in shopper footfall in our retail destinations, tumbling for a third successive month and at a fast rate than over the past quarter and indeed the year as a whole.
“That said, we do have to keep in mind that Scottish retailers are increasingly adept at harnessing the internet and multi-channel innovations to get through to consumers who might not have time to travel to the shops. Until April’s Scottish sales figures are published we won’t know what impact this waning of footfall numbers has had on actual retail sales.
“This is a time of significant tumult for the retail industry and shoppers undoubtedly remain cautious. The Holyrood Parliament now exerts significant influence over take home pay and the cost of living and it remains to be seen what impact the planned changes to council tax and devolved income tax next year will have on disposable incomes and consumer confidence going forward.”