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High Street Sales Plunge 3.9%

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Sales on the high street suffered their worst ever fall last month, adding to evidence that the UK is heading into recession and prompting renewed calls for an urgent cut in interest rates.

Figures from the Office for National Statistics today showed retail sales in June slumped by 3.9%, their sharpest monthly fall since records began in 1986.

This more than wiped out the record rise of 3.6% in May, which many economists suspected was just a temporary blip, helped by the sunny weather.

The latest snapshot of retail sales takes annual growth on the high street down to 2.2% - the poorest rate for over two years.

The monthly fall was much lower than economists had predicted. Howard Archer, economist at Global Insight, said that the monthly numbers highlighted the volatility of the data and it was more useful to look at several months together.

The less erratic three-month measure of activity in Britain's shops showed sales were up 0.6% on the previous three months - the lowest rate since December 2007.

"The clear overall impression that this gives, along with latest survey and company evidence, is that consumers are now increasingly reining in their spending - be it out of choice or necessity," Archer said.

Clothing and footwear shops were the worst hit last month, a breakdown of the figures showed. Food sales also fell 3.6%, the biggest drop since records began.

Household goods saw a gloomy month with sales posting the biggest monthly fall since 1991 and reflecting the dire state of the UK housing market.

Only one sector - department stores - produced higher sales, which the ONS said was down to early summer sales. However, across the retail sector prices crept up by 0.5% on the year, the biggest rise since May 2007.

Isn't the whole point of interest rate rises to stop people from spending and purge the excess?

“William McChesney Martin Jr. vividly described the Fed's role as to "take away the punch bowl." In essence, the Fed was supposed to be the "adult chaperone" at an economic party that was likely to get out of hand. Thus, the Fed was supposed to allow, even induce, if necessary, the occasional recession to cleanse the excesses of the economy”

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Personally I don't think rates will get cut any time soon, nor do I think they will rise... if oil reverts to around $100 per barrell which I have long predicted it will then that'll see a lot of the infaltionary pressure taken out, equally I think we'll see lower growth and lower inflation in the emerging economies.... I don't think it will have much effect on where house prices end up as the cycle is so long but I am increasingly of the view that the UK has a chance , a good chance of dodging the bullet... bank shares are off the bottom and I think will rise expescially through the next reporting season, commodities will come off a bit alongside oil and I reckon that some of the hot money will look for some value in the debt banks are currently holding as a result.. they'll see better returns in some of those tranches than in oil, commodities, gold, or prehaps slower growth emerging economies. They'll have to smart as some of the debt is pretty toxic to say the least but some of it (so they say) presents pretty good value and the chance for some stellar returns (if and only if the prognosis is for a slowdown rather than a horrible bust).

As I say I am much much more positive about the outlook currently... but not sure it will effect where house prices end up although it could feasably effect when they get there ( ie better the outlook the longer the correction, worse the outlook the faster the correction.... it'll take ages to feed into the numbers though and the first signs will be I suspect if purchase volumes start to show monthly rises.. albeit they are at historic lows currently)

next year could yet be very much rosier than I had feared it could be.

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  • 396 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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