Retailers will cheer England win but things are about to get much worse
EVERYONE will be thrilled that England has managed to scrape through the knock-out stages of the World Cup, but retailers are especially relieved. The near-term boost from the tournament will continue a little while longer. Those fans waiting to see if England could come up with the goods before buying a widescreen TV will splash out; sales of snacks and beer will tick up.
As it stands, the picture for retailers is hardly rosy: high unemployment; falling full time employment; subdued growth in earnings; high levels of household debt; and expensive petrol. No wonder sales are taking a battering.
But today’s climate will seem like halcyon days when the big squeeze hits with a vengeance. Cuts of up to 33 per cent in some departmental budgets mean there will be tens of thousands of public sector job losses, while a much tougher welfare state will depress the buying power of the poorest.
But it is the thumping rise in VAT, from 17.5 per cent to 20 per cent, that poses the biggest risk to shops. It can only send sales down further while pushing up inflation, possibly forcing the Bank to act by hiking interest rates.
For now, retailers should bask in the glory of an England win. This is as good as it’s going to get.