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UK retailers report more inflation pressure as economy reopens

UK retailers have reported the smallest price falls since the start of the COVID pandemic, partly due to shoppers buying more clothes and shoes as lockdowns eased, and they said price pressures were likely to rise further over the rest of 2021.

With the Bank of England watching carefully for signs of how quickly inflation is picking up, the British Retail Consortium’s shop price index for May showed prices were 0.6% lower than a year before, compared with a 1.3% fall in the year to April.

This was the smallest drop since February 2020.

The BRC’s shop price index typically shows year-on-year price falls, unlike the broader measure of consumer price inflation targeted by the BoE which includes a wider range of goods and services.

The BoE has forecast that CPI is likely to overshoot its 2% target and go above 2.5% by late 2021, due to a global rise in energy prices and what the central bank views as temporary pressures and one-off effects linked to the pandemic.

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British shoppers were keener to spend on new clothes and shoes last month as social-distancing restrictions eased, enabling people to meet at pubs and restaurants, the BRC said.

Supply chain disruption linked to COVID had also pushed up the cost of furniture and electrical goods, it added.

Prices were likely to rise more broadly later in the year, BRC chief executive Helen Dickinson said.

“Global food prices are currently at their highest in seven years, shipping costs have risen threefold since 2019, and commodity prices are climbing. We will likely see these costs filter through in the second half of this year,” she said.

Some new post-Brexit rules which affect food imports from the European Union take effect from Oct. 1, with others coming later, which the BRC warned would push up prices too.

The BRC collected price data between May 3 and May 7.

By David Milliken

Source: UK Reuters

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UK economy set to grow at fastest rate this year

The UK economy is set to grow at its fastest rate on record this year, experts have predicted.

The EY Item Club has upgraded its 2021 growth forecast from 5% to 6.8%, which would mark the fastest rate since official records began.

Chief economic advisor Howard Archer said the economy had “proven to be more resilient than seemed possible”.

The vaccine rollout and relaxed restrictions had helped the recovery, it said.

The UK’s GDP, which measures all the activity of companies, governments and individuals in the economy, shrank by a record 9.9% last year as coronavirus restrictions hit output, according to the Office for National Statistics.

But EY expects that the UK economy will return to its pre-pandemic size in the second quarter of 2022 – three months earlier than previously forecast.

Item Club economists also revised down their unemployment forecasts. The rate is now expected to reach 5.8% towards the end of this year, down from the 7% predicted in January.

Mr Archer said that the latest forecast suggested the economy would “emerge from the pandemic with much less long-term ‘scarring’ than was originally envisaged and looks set for a strong recovery over the rest of the year and beyond”.

He added : “While restrictions have caused disruption, lessons learned over the last 12 months have helped minimise the economic impact.”

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Figures released on Monday by Deloitte also suggest that the UK could be on track for a faster economic bounceback than previously thought.

Consumer confidence increased at the fastest rate in a decade in the first three months of 2021, according to its survey of 3,000 adults between 19 and 22 March.

Confidence rose by six percentage points to -11%, the Deloitte consumer tracker found.

“Going to a shop” topped the list of leisure activities people are most likely to do after lockdown, with 6 in 10 saying they plan to return within a month of restrictions lifting.

Ian Stewart, chief economist at Deloitte, said: “The UK is primed for a sharp snap back in consumer activity.

“High levels of saving, the successful vaccination rollout and the easing of the lockdown set the stage for a surge in spending over the coming months.”

In England and Wales, non-essential retail was allowed to reopen on 12 April.

Shops in Scotland will be allowed to reopen fully from Monday, while Northern Ireland is due to see non-essential retail reopen on 30 April.

Separate research published last Friday suggested that the recent easing of lockdown measures had triggered a surge in activity among UK firms.

A closely watched survey, produced by IHS Markit/CIPS, indicated that the looser restrictions had led to the fastest UK private sector growth since late 2013.

The IHS Markit/CIPS Purchasing Managers’ Index (PMI) rose to 60 in April, according to initial findings, up from 56.4 in March. Any figure above 50 indicates expansion.

The service sector grew faster than manufacturing for the first time since the Covid crisis began, the survey found, largely down to the reopening of non-essential shops seen in April.

Source: Hellenic Shipping News

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Redundancies Amongst the Over 50s Nearly Tripled in a Year

Redundancies amongst the over 50s have increased by 195% in a year, with the level and rate both higher than any other age group, according to new analysis of official ONS statistics from Rest Less, the digital community for the over 50s.

Rest Less’s analysis of the latest data produced by the Office of National Statistics shows that nationally, redundancies hit a pandemic peak of 395,000 in September to November 2020. Whilst redundancy levels have fallen nationally by 22% since the peak, they are falling more slowly amongst older workers.

Stuart Lewis, Founder of Rest Less, commented on the analysis: “While there are plenty of reasons to be optimistic about the economy starting to open up, it’s clear that businesses are far from out of the woods yet, with many still struggling to survive and the level of redundancies remaining historically high.

‘Whilst the extra extension to the furlough scheme has stemmed the flow of redundancies for now, redundancy rates amongst the over 50s remain stubbornly high and are the highest of all age groups.

‘With an estimated 1.3 million workers over the age of 50 still on furlough, there is a very real danger of a tsunami of redundancies amongst workers in their 50s and 60s when struggling employers are required to increase their contribution to the furlough scheme from July.

‘This is of concern to all of us, as previous research has shown that once unemployed, workers over the age of 50 are two and a half times more likely to drift into long term unemployment than their younger counterparts due to a mix of age discrimination in the recruitment process and a lack of accessibility to tailored retraining programmes.

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‘With the state pension now standing at 66 for both men and women, without more tailored Government support – similar to the scale and breadth of initiatives being put in place for younger workers – large-scale, long-term unemployment of this talented section of the population risks removing the engine room of growth for the entire UK economy.”

Kim Chaplain, Associate Director – Work, from the from the Centre for Ageing Better, commented: “These figures show just how devastating the impact of the pandemic has been on over-50s, with over 100,000 made redundant between November and January alone.

“This is particularly worrying because we know that over 50s, are likely to struggle more than any other group to get back into work – so we risk seeing many of these people leaving the workforce for good.

“In the months ahead, it’s vital that we build back a multigenerational workforce. Our economy needs both the direct contribution of experienced older workers and the support they provide to other, less experienced groups.

“We need to see targeted employment support to help over-50s back to work, and a strong message from government that not only is this group just as entitled to work as younger workers, they also provide a valuable contribution we cannot afford to lose.”

By Nigel Barlow

Source: About Manchester

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UK economy boom: Britain ‘will recover quicker than the eurozone’

THE UK ECONOMY will recover quicker than the eurozone does following the coronavirus pandemic, an economist tells Express.co.uk.

The biggest economies in Europe were brought to a stand still last year, and intermittent lockdown measures have taken their toll. But as the vaccine rollout in the UK accelerates, Bank of England Governor Andrew Bailey said recently that there is “light at the end of the tunnel”. The EU’s rollout has been hit with delay, and Chief Economist at Resolution Foundation, Jack Leslie, tells Express.co.uk that the UK economy is set to enjoy a quicker recovery than the eurozone. He said that this recovery will be sharper because of the successful distribution of jabs, but also because the UK economy endured a deeper recession initially.

Mr Leslie said: “I think the starting point is that the UK economy has fared worse over the past year than most of Europe. Countries like Spain Italy and France have also fared pretty badly.

“Most in Europe have had a better crisis, so there’s more scope for the UK to have strong growth in 2021 than Europe, so I would absolutely expect the UK to have stronger growth this year.

“The faster vaccine rollout will be a big deal, it has been a major success and will enable the UK to recover faster as well, but I think ultimately what a lot of the recovery is going to need is globally everyone getting back on their feet, it will be positive for the UK if Europe also has a strong recovery.”

The UK economy suffered a record annual slump in 2020, shrinking by 9.9 percent last year as coronavirus restrictions hit output.

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The contraction in 2020 “was more than twice as much as the previous largest annual fall on record”, the Office for National Statistics (ONS) said.

Britain’s annual economic decline was the worst in the G7.

GDP fell by 3.5 percent in the US, by five percent in Germany, 8.3 percent in France and 8.9 percent in Italy.

The Canadian economy is forecast to have shrunk by five percent, and Japan’s by about 5.6 percent.

However, the UK fared better than Spain, where the economy collapsed by 11 percent last year.

Britain also managed to avoid a double-dip recession, something Europe looks set to endure.

Marcel Klok, senior economist at ING, said last month: “With lockdowns extended into the new year, it really feels like it is darkest before dawn in the euro zone. In the first quarter, GDP is all but certain to contract again and the question is now by how much.

“The combination of lockdowns and vaccinations will allow for more substantial reopening of economies over the course of the second quarter. This will then also mark the start of the recovery of the euro zone economy.”

The UK and EU have also clashed again over vaccines after European Council President Charles Michel accused the UK of blocking the export of coronavirus vaccines.

Foreign Secretary Dominic Raab sent a letter to Mr Michel on Tuesday night dismissing suggestions Britain had banned exports of the life saving doses.

He said: “I wanted to set the record straight. The Government has not blocked the export of a single COVID-19 vaccine or vaccine components.

“Any references to a UK export ban or any restrictions on vaccines are completely false.”

Mr Michel had said that Britain and the US “imposed an outright ban on the export of vaccines or vaccine components produced on their territory”.

By CHARLIE BRADLEY

Source: Express

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UK suffers worst annual slump since 1709

The UK economy contracted by 9.9% in 2020, its largest annual contraction since the Great Frost of 1709, as the coronavirus pandemic ravaged economic activity.

In the final quarter of the year, gross domestic product (GDP) grew by 1%, according to the Office for National Statistics, as the country re-imposed nationwide lockdown measures in a bid to combat a resurgence of Covid-19 cases.

The 9.9% annual contraction is more than twice that seen in 2009 in the aftermath of the global financial crisis, and narrowly worse than the 9.7% slump during the crisis of 1921.

Economists polled by Refinitiv had expected an 8% annual decline, in 2020 with a fourth-quarter expansion of 0.5%. This follows a revised 16.1% rebound in the third quarter as social, travel and business restrictions were eased.

As of Friday morning, the UK has recorded more than 4 million cases of Covid-19 and 115,000 deaths, according to data compiled by Johns Hopkins University. The UK has been blighted by new and more transmissible variants of the virus in recent months.

Hitesh Patel, portfolio manager at Quilter Investors, said the U.K. had experienced an “annus horribilis” in the form of the “trifecta” of a public health crisis, economic shutdowns and uncertainty surrounding Brexit.

“However, 2020 is in the past and the UK arguably has a promising second half of the year ahead given the success of the vaccine rollout,” he said.

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“This could easily be derailed should one of the mutations prevent the vaccines properly taking effect, but for now a double dip recession has been avoided and soon lockdowns may potentially be the thing of the past.”

England remains in a nationwide lockdown with no clear end date, although British Prime Minister Boris Johnson confirmed on Wednesday that around one in four adults, approximately 13 million people, have now received the first dose of a Covid vaccine.

Monthly GDP in December increased by 1.2% from the previous the month, but remained 6.3% below the level of February 2020. Fourth-quarter GDP remained 6.6% below the level seen in the fourth quarter of 2019.

The services sector grew by 1.7% in December having contracted by 3.1% in November, while manufacturing posted its eighth consecutive month of growth, the ONS said, albeit its smallest incline since May 2020.

“The tighter restrictions imposed towards the end of last year, which are likely to remain in place for much of the current quarter, suggest that the economy may shrink again,” said Dean Turner, economist at UBS Global Wealth Management.

“However, what is clear from the data is the resilience and adaptability of firms and households, so any contraction will be modest. As and when restrictions are eased, we continue to expect a vigorous rebound in the UK economy.”

By Elliot Smith

Source: CNBC

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