As retail spending improves

Tax rises ‘could reverse rise in shop sales’

David LonsdaleScottish shops saw a rise in sales over the summer despite the wet weather but amid a warning that rising inflation and tax increases would erode consumers’ spending power.

Sales were 2.1% higher between July and September and by 4.9% on an annual basis, according to the latest Retail Sales Index for Scotland. Without adjusting for inflation, they rose 2.1% over the quarter and by 3.2% annually.

David Lonsdale, director of the Scottish Retail Consortium, welcomed the figures but cautioned the government against increasing personal taxes which would impact on consumer spending.

He said: “These positive sales figures are welcome news for retailers who’ve seen sluggish growth in recent years.

“However, intense competition means retailers are now in their fourth year of shop price deflation, so whilst these statistics are encouraging, retailers will hope for sustained improvement in upcoming months.

“It is worth noting these sales figures are not adjusted for inflation, which is now at a two year high. When that inflationary pressure is combined with at best modest wage growth, consumers will be very aware of any changes in personal taxation which could affect their disposable income.

“Retailers who are dependent on customers are just as aware of this. Therefore, with all the uncertainty facing the economy, the Scottish Government needs to provide reassurance to consumers they won’t be hit in the pocket by any unexpected tax rises; and they should also carefully consider their current tax policies to discern whether they are the right choices to grow the Scottish economy.”

Euan Murray, relationship director, Barclays Corporate Banking, Scotland, said: “Q3 has been a broadly positive period in the retail space with food and non-food categories both feeling the benefits.

“Consumer confidence appeared to grow despite the result of the EU referendum, which it was feared would dampen spending. The supermarkets were the biggest winners over the quarter with sales volumes on the up.

“We will be watching the sector with interest as the inevitable post-Brexit price rises from retailers gradually trickle down to the consumer.”

The Scottish Conservatives have urged First Minister Nicola Sturgeon to rethink tax hikes that will make Scotland the highest taxed part of the UK.

Ahead of her opening the National Economic Forum in Edinburgh, the First Minister was urged to ‘listen to the growing number of voices telling them to reverse these tax hikes’.

It comes after the Scottish Retail Consortium warned that the changes to council tax could lead to householders paying an extra £170 million in council tax next year.

This would then in turn damage consumer spending and threaten jobs up and down the country.

Scottish Conservative shadow secretary for the economy, Dean Lockhart, said: “The SNP have now had repeated warnings about the negative impact their tax rises will have on our economy.

“We’ve consistently seen Scotland lag behind the rest of the UK in terms of economic growth and job creation, making it clear that there are fundamental problems with the SNP’s current approach.

“Their council tax proposals threaten to make the situation even worse, and it and it’s time they listened to the growing number of voices telling them to reverse these tax hikes.

“It’s not acceptable that Scots will have to pay higher taxes than those in the rest of the UK, and until the SNP realise this our economy will continue to suffer.”

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