Britain’s vote for Brexit has not lead to any significant slowdown in consumer spending according to a recent report published this week by the British Retail Consortium (BRC) and KPMG. While GfK have recorded consumer confidence falling to its lowest point for more than 26 years in July, the immediate impact of this on UK consumer purchasing behaviour has been slight according to the BRC.
Covering the four weeks from July 3 to July 30, the report indicates that online and high street sales rose at the fastest pace since January in the month of July. Sales for all stores rose 1.9% compared with a 2.2% gain in July 2015 and a 0.2% increase in June.
Heavy discounts and warm weather have helped drive a rebound in retail sales, potentially abating fears of the UK economy grinding to a halt following the Brexit vote. According to IGD Retail Analysis, volume picked up to 1.4% – its highest level since March 2015 – and was helped by strong sales of snacks, picnic food and soft drinks during the hot weeks of July, which has been adjusted for inflation.
Morrisons’ have announced a post-referendum boost to shoppers by cutting the price of more than 1,000 products by an average of 18%. The reductions are the latest phase of the battle between Britain’s largest supermarkets to win back customers who have turned to the discounters Aldi and Lidl. Such price cuts further intensify the retail sector’s competitive landscape and emphasise the impact of German discounters Aldi and Lidl’s entry into the British market.
The Wall Street Journal reports that the Bank of England last week launched a multipronged stimulus package which is hoped to prevent the post-Brexit downturn from becoming a recession. The central bank cut its benchmark interest rate to an unprecedented 0.25%, and revived and expanded a crisis-era bond-buying programme in an effort to recuperate the British economy. The National Institute of Economic and Social Research (NIESR) anticipates that growth in the economy will stall rather than plummet- economic growth is expected to fall back from 2.2 per cent last year to 1.7 per cent this year before slowing further to 1 per cent next year. By 2018, NIESR expects the economy to have expanded by 1.9 per cent.
For more information please contact Daisy.Higgins@BordBia.ie
Source: Bord Bia – Consumer Spending Remains Stable in the UK
