By Elliot Wright, 9th February 2010
The High Street experienced its worst January in 15 years this
year, sparking fears that the UK could spiral into a second
recession.
Like-for-like retail sales were down by 1.2% compared to a year
ago - in stark contrast to the 0.5% rise that had been predicted by
economists - as many shoppers were stuck at home due to extreme
snow and ice.
When new stores are factored in, the figure rose by a mere 1.2%
on a year ago, according to a survey by the British Retail
Consortium (BRC).
Stephen Robertson, director general of the BRC, said: "It's an
awful start to the year and in stark contrast to an upbeat
December. This is the worst January sales growth in the 15 years
we've been running the survey.
"The VAT change brought some sales forward to December, but
customers are becoming cautious again in the face of economic and
political uncertainty. Retailers will be hoping these results are
mainly a snow-induced blip, rather than an indication of further
difficulties."
Economists put a significant probability on
Britain dipping back into contraction early this year.
Britain clawed its way out of the recession in the last quarter
of 2009 with a meagre 0.1% growth in the economy, but analysts have
warned that marginal growth coupled with disappointing retail
figures could lead to a double dip recession.
In addition, with the temporary VAT tax cut having been
withdrawn and the car scrappage scheme finishing at the end of
March, economists put a significant probability on Britain dipping
back into contraction early this year.
Howard Archer, economist at IHS Global Insight, said:
"Households face still very challenging conditions, including high
unemployment, still markedly falling full-time employment, low
earnings growth, high debt levels, and January's VAT hike.
Meanwhile, still serious concerns about the economic outlook and
jobs are likely to maintain consumers' desire to improve their
personal finances."
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