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UK retailers suffer worst Christmas in a decade

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Retailers have just suffered their worst Christmas in a decade as weak consumer confidence dented demand, according to a report by the British Retail Consortium and KPMG. It said sales showed 0% growth in December compared to a rise of 1.4% in December 2017, making it the poorest performance since 2008. On a like-for-like basis, sales decreased by 0.7% from a year earlier. Helen Dickinson, chief executive of the BRC, said: "Squeezed consumers chose not to splash out this Christmas with retail sales growth stalling for the first time in 28 months. (Retailers) are having to wrestle with mounting costs from a succession of government policies - from the Apprenticeship Levy, to higher wage costs, to rising business rates." Samuel Tombs at Pantheon Macroeconomics said: "Sluggish retail sales appear to be symptomatic of wider weakness; Barclaycard also reported that nominal growth in consumers’ overall spending slowed to just 1.8% in December from 3.3% in November.”

UK house prices surprisingly rose at the fastest monthly rate in almost two years in December, according to the latest Halifax house price index. The rise came despite warnings over the potential impact of Brexit for the year ahead.

It said the average cost of a home rose by 2.2% compared with November. On an annual basis, prices rose by 1.3% in the three months to December, making it the weakest year since 2012. The survey contradicts a report by rival lender Nationwide, which suggested house price growth was 0.5% in December – the slowest annual rate since February 2013.

The pace of UK economic growth slowed in the three months to November to its weakest pace in six months. 

GDP data from the Office for National Statistics (ONS) showed the economy grew by 0.3% during the period, less than the 0.4% in the quarter to October. The ONS said manufacturers suffered their longest period of monthly falls in output since the financial crisis, being hit by weaker overseas demand.

Global economic growth is forecast to slow to 2.9% this year compared to 3% last year, according to the World Bank. It said that trade disputes and tightening monetary policy would act as a drag on growth. In its Global Economic Prospects report for January, it said that an especially worrying aspect was the rise in government debt-to-GDP levels in low-income countries from 30% to 50% in the past four years. "Under these circumstances, were financing conditions to tighten abruptly, countries could experience sudden capital outflows and struggle to refinance debts," it said.

The US and China finished their first round of trade talks on Wednesday in what seemed to be an upbeat mood. Speaking that morning after three days of negotiations in Beijing, US Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, Ted McKinney, said the talks had gone "just fine". In a statement on Thursday morning, China’s Commerce Ministry said the talks were extensive, and established a foundation for the resolution of each other’s concerns. New UK car registrations fell by 6.8% last year as regulatory upheavals, plummeting consumer confidence and anti-diesel policies took their toll. The figures, which were released on Monday by the Society of Motor Manufacturers and Traders, showed a 5.5% drop in December, finishing off a year in which a total of 2.36m cars were registered – 12% below the peak reached in 2016. “A second year of substantial decline is a major concern” said Mike Hawes, SMMT chief executive.

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Important Notes:

Main source of information: Company Report and Accounts, Bloomberg

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