Retail Sales Up

Retail sales are growing at their fastest rate for 17 months in further signs the recession is starting to ease, new figures showed today.
High Street sales in October were 3.4 per cent up on the same month last year in the biggest year-on-year rise since May 2008.
In another sign of recovery, mortgage lending was up 5 per cent in October as the property market continues to rebound.
But new public finance figures laid bare the legacy of the recession, with borrowing of £11.4billion last month – the highest since records began in 1946.
The rise in October was worse than expected and takes public sector net borrowing for the year so far to £86.9billion.
There are now fears it could spiral to almost £200billion by the end of 2009 – far outstripping Alistair Darling’s already bleak forecast of £175billion.

It piles more pressure onto the Chancellor ahead of the Pre-Budget Report next month, when may be forced to revise up his original estimate.
The Centre for Economics and Business Research claimed the Government had been forced to borrow more because it had been too optimistic about tax receipts.

Chief executive Douglas McWilliams said: ‘Our view is that excess spending based on over-optimistic projections of tax receipts has been a root cause of the excess borrowing. All eyes will be on the Chancellor’s Pre-Budget Report.
‘With the UK’s bond rating under scrutiny, it will be necessary to take action in the PBR that does not depend, as last year or in the Budget, on over-optimistic growth forecasts or on expectations of tax receipts from higher taxes on potential taxpayers, who in reality will turn out to be internationally mobile.’
Public sector net debt as a whole has now soared to £829.7billion – £134.6billion higher than a year ago and equal to 59 per cent of GDP.

October is usually a strong month for the Treasury’s coffers because of tax on corporate profits, but the recession means these have been drastically reduced.

Tax receipts have now fallen for a record 13 months in a row

In a double whammy, the Government has been forced to spend more thanks to rising unemployment and benefit costs.
The data piles the pressure on Gordon Brown, who set out plans for a law binding a future government to halve the deficit by 2014 in yesterday’s Queen’s Speech.
It also highlights the scale of the challenge that will face whoever wins the General Election, expected next May, as they battle to bring public finances back under control.
Mr Brown has already been attacked after a shock 0.4 per cent decline in output in the third quarter, when Britain had been expected to pull out of the recession.
The Prime Minister had claimed the UK was better placed than other countries to exit the downturn when in fact it has been left floundering while other economies improve.
The hike in retail figures was driven by sales of clothes and shoes, which are a massive 10.7 per cent up on a year ago.
Non-food sales were up 3.5 per cent year-on-year, compared to 1.6 per cent in the food sector, the ONS said.

Online retailers and repairs services enjoyed the biggest rise thanks to the recent postal strikes, up a huge 15.8 per cent on October 2008.
The hike in retail figures was driven by sales of clothes and shoes, which are a massive 10.7 per cent up on a year ago.
Non-food sales were up 3.5 per cent year-on-year, compared to 1.6 per cent in the food sector, the ONS said.

Online retailers and repairs services enjoyed the biggest rise thanks to the recent postal strikes, up a huge 15.8 per cent on October 2008.

Meanwhile, banks handed out £13.5billion on mortgate lending in October – up from £12.9billion in the previous month.

But it appeared just to be a rise after the traditional summer dip, with the figure still a massive 27 per cent down on October 2008.

Activity in the market traditionally recovers in September and October after August, when many potential buyers are on holiday.

The Council of Mortgage Lenders said house buying has picked up but that the next few months will be guided by ‘seasonal factors’ rather than shifts in lending patterns.

This is because would-be homeowners still need large deposits to secure a good mortgage and existing borrowers have little incentive to refinance

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