Flat growth

Wet weather dulls GDP while Euros will lift retailers

Rain in Princes Street
Wet weather has dampened retail sales (pic: Terry Murden)

The UK economy showed no growth in April,  in line with economists’ expectations, and potentially nudge the Bank of England towards cutting interest rates.

April’s stagnation comes after the UK economy recorded its fastest growth in two years from January to March and moved out of a short-lived recession at the end of last year.

The all-important services sector grew 0.2%, helping the economy avoid shrinking in April, but production fell 0.9%. Construction was even weaker, contracting by a hefty 1.4%, largely as a result of the wet weather.

The data from the Office for National Statistics (ONS) will add to Prime Minister Rishi Sunak’s hopes of a Conservative victory on 4 July.

This months’s figures are likely to get a lift from the start of a summer of sport as consumers spend more on food and electronic devices.

Analysts believe a combination of falling inflation, a cut in energy bills and lower borrowing costs should lift household spending during the remainder of the year.

Ben Jones, lead economist at the CBI, said: “After one of the wettest Aprils since records began it’s no surprise that rain dampened consumer spending, with many households also feeling the pinch from higher prices and bills.  

“But consumers and firms alike are going to start to feel the benefit of lower inflation, which in turn should boost confidence and support spending as we head into a summer packed with major entertainment and sports events, like the Euros. 

“Lower inflation, rising real incomes and low unemployment mean household spending is set to drive a steady economic recovery in the year ahead, which should broaden out to stronger business investment next year.  

“However, to ensure longer-term, sustainable growth we must tackle our ongoing productivity problem. Top of the in-tray for the next government should be a cutting-edge trade and investment strategy, a Net Zero Investment Plan and more support for firms to invest in automation and AI.  

“At the same time, a focus on building momentum behind the ‘big three’ enablers of tax, planning and skills policies within the first 100 days can give firms a clear flightpath for growth.” 

Rachel Reeves, Labour’s Shadow Chancellor, said: “Rishi Sunak claims we have turned a corner, but the economy has stalled and there is no growth.”

Euros boost for consumer spending

Scotland’s participation at the Euros will lift consumer spending (pic: Terry Murden)

England and Scotland’s Euro 2024 exploits are likely to net retailers a vital spending boost.

After weak retail sales growth in May of just 0.7%, a new poll of 2,000 UK shoppers suggests that the nations’ love of football will translate into additional purchases. Groceries and electronic devices are the likely big winners.

Kris Hamer, director of insight at the British Retail Consortium, said: “British retailers could score a hat-trick, with boosts to groceries, electronics and official merchandise.

“After sluggish spring sales, shoppers are expected to kick off their summer spending at the Euros.”

David Lonsdale, director of the Scottish Retail Consortium, said: “With football fans across the country getting behind Steve Clarke and the Scotland team ahead of the European championships this should kick-start a brighter period of trading for Scottish stores.

“With the Paris Olympics following fast on the heels of the Euros, this summer of major sporting events could provide retailers with a welcome lift, especially if fans are given something to celebrate over the coming weeks.”

The polling found:

  • 13% (12% of Scots) plan to spend more on groceries, alcohol, and takeaways to enjoy whilst watching the Euros
  • 9% (4%of Scots) plan to host or attend gatherings with family and friends to watch matches
  • 6% (11% of Scots) of shoppers expect to buy a new TV or electronic device to watch and keep up with the Euros
  • 4% (7% of Scots) plan to purchase official merchandise

Mappin & Webb opens

New store: Mappin & Webb in Multrees Walk

Mappin & Webb, the watches and jewellery retailer, has opened its showroom in the heart of the luxury retail quarter on Multrees Walk, in Edinburgh.

It is the largest Mappin & Webb showroom in Scotland, over two floors.

Adam Stone, head of retail asset management UK at Nuveen, owner of the St James Quarter, said: “The arrival of Mappin & Webb is extremely exciting, and we are delighted that the retailer has chosen Multrees Walk Edinburgh for their latest and largest boutique in Scotland.

“With designated watch and jewellery areas, a private hospitality and VIP area, pre-owned watch gallery plus a large after-sales area, the new store will enrich the Multrees Walk luxury shopping experience even further.”

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