? Sales fall 0.4% in February compared with last year
? House prices dropping in all areas except London
Consumers fled the high street in droves last month, according to industry figures released today. They showed that a slump in sales following the government's VAT hike became entrenched during February.
Across the high street spending dropped 0.4% in February compared with the same month last year in a marked reversal of the 2.3% bounce seen in January after the pre-Christmas snow chaos, the British Retail Consortium (BRC) said.
Big ticket items saw declines, with furniture heading the list of costly goods shunned by shoppers, it said. Clothing and footwear retailers also suffered a fall in what the BRC said was a more accurate picture of the struggle ahead for the industry.
The deteriorating picture for retailers is expected to put further pressure on the chancellor to include measures to boost the economy in his budget later this month.
George Osborne has indicated he plans to bring forward several measures to help businesses prosper despite public spending cuts and rising raw materials costs. Prime minister David Cameron went further at the weekend when he singled out retailers among other business sectors as the natural beneficiaries of Tory support.
Yet most retailers are gloomy about the outlook for the year after a series of consumer confidence surveys showed households are unwilling to open their wallets while the risk of job losses hangs over them. Local authority cuts begin in earnest from April and are expected to result in at least 280,000 job losses.
The British Chamber of Commerce (BCC) said the weakening economy and increasing likelihood of interest rate rises had forced a downgrade in its estimate of growth this year to 1.1%, half the 2.2% predicted by the government's independent fiscal watchdog, the Office for Budget Responsibility.
The accountants PricewaterhouseCoopers (PwC) echoed the BCC's view that a rate rise would knock growth. In a report that argued growth in 2011 would struggle to be more than 1.4%, it said the Bank of England's monetary policy committee should resist pressure to raise interest rates "before the economic recovery is secure". PwC said retailers should be worried that recent cuts in spending were likely to become longer term trends. It said spending on housing and gas, electricity and oil has risen, leaving less to spend on other items such as clothing and home furnishings.
The gloomy high street figures were matched by data from the surveyors trade body RICS showing estate agents struggled to find anyone interested in buying a home in February, especially outside the south-east. It said the number of transactions remained at historic lows with buyers unable to find deposits and mortgages.
A spokesman for RICS said: "Widening regional variation in the UK's housing market became increasingly noticeable during February, led by an improvement in London, while large parts of the north, east and Midlands continued to experience a more downbeat picture."
London was the only region to record a positive reading for house prices, with 14% more chartered surveyors reporting prices rising than falling. Across the UK, home sales expectations look slightly stronger for the next three months, with 12% more surveyors predicting rises not falls in activity; that said, transaction levels are still unusually flat.
On an upbeat note, a report from Manpower, the recruitment firm, said two years of "horrendous cuts" in banking jobs had come to an end with positive signs of hiring in February. It said finance, banking and business services had emerged as the sector of the UK economy most likely to hire staff. "Overall, UK employers are predicting a slight increase in recruitment for the second quarter of 2011, despite a considerable fall in the hiring intentions of the public sector," it said.
The report follows a similar outlook by rival firm Reed, which said last week that banks and other finance firms were feeling more confident about hiring staff.
Source: http://www.guardian.co.uk/business/2011/mar/08/consumers-flee-high-street-rise-vat
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