“Online sales were hit particularly hard due to lower levels of discretionary spending”
As expected, the latest data set from the Office for National Statistics (ONS) highlighted that consumer spending, impacted by rising costs, led to a reduction in UK retail sales throughout March. As people tightened up on non-essential spending, retail sales volumes fell by 1.4% in the month following a decline of 0.5% in February. This fall significantly lags the 0.3% decline expected by economists.
The biggest contributor to the reduction came from online retail, with sales volumes declining nearly 8% during March, following a fall of almost 7% in February. The reduction was led by sales of food, clothing and footwear. Fuel sales also dropped as people cut travel amid record petrol and diesel prices, with 39% of people cutting back on non-essential journeys in private vehicles. ONS Director of Economic Statistics, Darren Morgan commented on the data, "Online sales were hit particularly hard due to lower levels of discretionary spending. Fuel sales also fell substantially, with evidence suggesting some people reduced non-essential journeys, following record high petrol prices, while food sales continued to fall, dropping for the fifth consecutive month."
Consumer confidence fell in April for the fifth straight month to -38, the lowest rating since the height of the financial crisis 14 years ago. The recent GfK survey highlights people's weakening confidence in the economy and in their personal finances. Joe Staton, GfK's Client Strategy Director commented, "This is dire news for consumer confidence and with little prospect of any economic relief on the horizon we can only forecast further falls in the index for the year ahead.”
Cancel the sub
As consumers tighten their belts, research from Kantar suggests that during Q1, 1.51 million subscription services were cancelled as British households proactively looked for ways to reduce their outgoings. With 58% of UK homes having at least one paid streaming service such as Amazon Prime, Netflix and Disney+, the research concluded that the proportion of consumers planning to cancel subscriptions had risen to its highest ever level at 38%.
PM trade visit to India
Boris Johnson visited India last week in an effort to deepen trade ties with the country. Meeting the Prime Minister of India Shri Narendra Modi in Delhi for the first time since last autumn, Mr Johnson vowed to push towards agreeing a post-Brexit trade deal between India and the UK by late October. After the meeting, the Prime Minister said that deepening trade relations with India was a priority and that the country was "an incredible rising power in Asia." In a joint statement issued after the meeting, entitled ‘Towards shared security and prosperity through national resilience’ the leaders welcomed positive growth in bilateral trade, highlighting the potential to double trade by 2030.
French Election 2022
Major political news of the week came on Sunday, when Emmanuel Macron beat Marine Le Pen to win the French Presidency, becoming the first French President to be re-elected in 20 years. After a tight race, Macron won by 58.55% to 41.45%, a greater margin than expected, although the voter abstention rate was 28%, the highest in over 50 years. During his victory speech, on Champs de Mars in central Paris, Mr Macron promised to be the "President for each and every one of you."
The weak UK sales data, fuelling concerns of slowing economic growth, weighed on European markets at the tail end of last week. After a strong start for London stocks on Tuesday, early gains were lost after a weak opening on Wall Street. The FTSE 100 closed up 0.08% at 7,386.19. US stocks closed sharply lower on Tuesday as concerns over inflation, global economic growth, a fresh surge of COVID-19 cases in China and the war in Ukraine fuelled further volatility. The Dow Jones ended the session more than 800 points lower to close at 33,240.18.
On Monday, the board of Twitter unanimously agreed to a $44bn takeover offer from Elon Musk, following his bid in mid-April. Musk commented on the takeover, "Twitter has tremendous potential - I look forward to working with the company and the community of users to unlock it." Subject to various approvals (stockholder, regulatory and closing conditions) the transaction is expected to close this year.
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