Festive cheer eases as British retail sales rise; Borrowing comes ‘early Christmas gift’ for Chancellor Reeves – Business Live | Business

There was no special excitement in the UK automobile sector before Christmas last month.

Car production numbers in Britain in November were the worst recorded in more than 40 years, as weak demand in the UK and across Europe caused losses for manufacturers.

Only 64,216 new cars came off UK factory lines, the worst performance for any November since 1980. Domestic market production fell 56%, while exports declined 21%.

Production was also hit due to factory disruptions as manufacturers moved toward making electric vehicles.

Mike Hawes, SMMT Chief Executive says:

While the decline was expected given the extensive changes underway at many plants, manufacturing is under pressure at home and abroad with billions of pounds committed to new technologies, new models and new production tooling.

The government can help by supporting consumers in the transition, fast-tracking its industrial strategy for advanced manufacturing and, most importantly, reviewing the market regulation that is placing huge pressure on the sector.

“Christmas has come early” for Chancellor Rachel Reeves as borrowing fell short of expectations in November (see previous post).

so says Mercy gregoryDeputy Chief UK Economist at Citi Consultancy capital EconomicsWho told customers:

Not only was borrowing of £11.2 billion (by PSNB pre-banks measurement) well below the consensus forecast of £13.0 billion, but it was also £3.4 billion less than in November 2023 and the lowest November borrowing in three years .

The analysis showed that public sector spending on salaries was £2.4 billion more, taking total current expenditure so far this year to £17.7 billion compared to the same period last year. But due to recent strength in wage growth and the fixed personal tax cap, total tax receipts were £3.2 billion higher than in November 2023.

But while borrowing fell to just over £11 billion last month, the recent weakening economy – and rising market interest rates – could make it difficult for Reeves to reduce the deficit as quickly as planned.

This increases the likelihood that additional revenue-raising tax increases or spending cuts will be needed, gregory They say:

According to the report, today’s sales figures show “less festive enthusiasm for retailers”. alex kerrBritish economist capital economics,

Not only was sales growth in November less than expected, but sales still continued to decline in the October-December period. kerr explains, connects;

Noting that the 0.7% m/m (month-on-month) decline in sales volumes in October was due to cautious spending by households ahead of potential tax rises in the Budget and the Chancellor avoiding large personal tax rises, It is somewhat encouraging that sales volumes bounced back in November.

This was helped by the ONS seasonal adjustment capturing the unusually late timing of Black Friday this year.

But the division of sub-regions was a “mixed situation”. kerr Explains:

Sales volumes at ‘other’ stores and home goods stores increased by 2.5% m/m and 1.1% m/m respectively. And food stores posted a 0.5% m/m gain.

But sales at department stores fell 0.9% m/m and sales at clothing stores fell 3.5% m/m in October to a 2.6% m/m decline as households cut back on spending on winter clothing. Continued delay in doing so. And fuel sales declined 0.7% per month, probably offset by a 0.9% per month increase in petrol pump prices.

We also have new data showing a decline in government borrowing.

The UK government borrowed about £11.25 billion last month, the lowest November figure in three years, helped by a rise in tax receipts and a fall in interest payments on the national debt.

The Office for National Statistics (ONS) reports that public sector net borrowing was £3.4 billion lower than in November 2023 – less than the expected £13 billion.

Happily for the Treasury, the interest bill on central government debt more than halved to £3 billion in November; This is £4.7 billion less than in November 2023 and the lowest November figure in the last five years.

The decline was due to a recent decline in the RPI inflation measure, which is used to set the interest rate on many government gilts.

Jessica Barnaby, ONS Deputy Director for Public Sector Finance They say:

“Borrowing this month was £3bn less than last year and borrowing in November was the lowest in the last three years. Central government tax receipts increased compared with the previous year, while increased spending on public services and benefits was offset by lower debt interest.

Good morning, and welcome to our comprehensive coverage of business, financial markets and the world economy.

After a disappointing autumn, retail sales growth has returned in Great Britain – helped by early Black Friday offers.

New data from the Office for National Statistics shows retail sales volumes nationwide rose 0.2% month-on-month in November – following a 0.7% decline in October as budget uncertainty gripped the economy.

November is a big month in the Golden Quarter for retailers, but the figures aren’t exactly dazzling. While retailers would welcome any pick-up in trade, November sales were weaker than expected – economists had forecast a 0.5% rise.

Sales at supermarkets and other non-food stores rose, but purchases at clothing retailers declined.

Neil Birrell, Chief Investment Officer Premier Mitton Investors, The data shows consumers are “feeling the pinch in the sluggish economy”.

birrell Connects:

Bank of England has kept interest rates unchanged [yesterday] And inflation in the system, there are concerns about growth prospects as we enter the new year. Christmas is an important period for retail sales and this will give another signal on the short-term outlook and could influence the BOE at its next meeting.

Unfortunately, the data does not directly include what happened on Black Friday, which fell on 29 November – but the ONS has adjusted its data to reflect this.

ons senior statistician Hannah Finselbach Explains:

“Retail sales increased slightly in November after a decline the previous month.

“Sales at food stores, especially supermarkets, increased for the first time in three months. It was also a good month for home goods retailers, especially furniture stores.

“Clothing store sales once again fell sharply, as retailers reported tough trading conditions.

“While the November retail sales survey covers the four weeks to November 23, Black Friday itself will fall within the December figures. However, our data accounts for this variation over time to give us the best picture of what is happening in stores.

agenda

• 7am GMT: UK retail sales report for November

• 7am GMT: UK public finance reports from November.

• 10.30am GMT: Bank of Russia interest rate decision

• 1.30pm GMT: US PCE inflation measurement for November

• 3pm GMT: University of Michigan survey on US consumer confidence 3pm