UK retail and house prices fall as buyers await public spending cuts
Published 11/08/2010 | 05:00
RETAIL spending in Britain slowed in July and house prices fell as looming public-spending cuts slowed the country's economic recovery, according to figures released yesterday.
The British Retail Consortium said retail sales grew 0.5pc in July compared to a year earlier, down from a 1.2pc hike in June and the smallest rise since April.
The group said non-food items such as homewares and furniture were the worst affected as wary consumers focused on essential purchases.
"Talk of public spending cuts is unsettling customers and they are concentrating on essentials," said the consortium's director-general, Stephen Robertson. "It's clear the recovery continues to need support."
A separate report from the Royal Institution of Chartered Surveyors suggested house prices are falling again after a year of recovery.
The group said 8pc more of its members reported a fall than a rise in property prices in July, the first time since July 2009 that the survey has found an overall decline.
It said the fall came as supply outstripped demand, with vendors putting more properties on the market while buyers remained cautious. Spokesman Ian Perry said "numbers suggest that this softer trend will continue through the second half of the year."
Countering some of the negativity, the Office for National Statistics revealed that Britain's trade deficit with the rest of the world narrowed to a four-month low in June after a rise in exports -- providing encouragement that trade can make a strong contribution to the domestic recovery.
The total trade deficit narrowed to £3.3bn in June from a 22-month high of £3.8bn in May, as exports of goods and services rose by 2.6pc, outstripping import growth of 0.9pc.
"One swallow does not make a summer, but the hope must be that U.K. exporters are finally starting to benefit from sterling's weakness and that this will help prop up growth over the coming months," said IHS Global Insight economist Howard Archer.
However, Archer and other economists warn that exports could be hit in coming months by slowing global growth and a tepid recovery across the eurozone.