UK and EU growth

The most recent retail sales figures for the UK showed a welcome boost in April. The three month on three month was only up 0.1%, as March was a poor figure. In the Eurozone the latest three month on three month figure for retail sales shows no growth at all, after a disappointing April.

Retail remains very competitive, with a lot of pressure on older brands trading from too many High Street locations. On line shopping expanded by 17.3% in the UK over the last year, taking business away from more traditional outlets.

The UK’s PMI figure for services came in at 54 this month. This is similar to the Composite PMI for the Eurozone of 54.1.

There has been a slowdown in both the Eurozone and UK economies so far this year, with retail growth subdued. In the UK this is the result of the tighter money policy the Bank has been pursuing. The EU figures were compiled before the latest worries in markets about the situation in Italy.

This entry was posted in Uncategorized. Bookmark the permalink. Both comments and trackbacks are currently closed.

34 Comments

  1. Lifelogic.
    Posted June 5, 2018 at 4:25 pm | Permalink

    The bank lending restrictions on property lending and stress testing are now absurd. If you want to borrow more against existing property to fund other developments or investments the banks regulations basically assume you are going to throw the new money down the drain. Then they stress test the new overall loan it only against the income from that property with very tight repayment restrictions and pessimistic assumptions and they ignores any other substantial income you have and any return the new lending will produce.

    This is hugely damaging and economically absurd. What is the government playing at. Do they want more houses or not. Hammonds Tax attack on Landlords and Tenants are also totally mad and hugely damaging. Why on earth are the government doing this? Margins and fees generally high too.

    Economy doing rather well given this idiotic government, idiotic fiscal regime, over regulation and the real threat of Corbyn thanks to May’s gross incompetence.

  2. Georgy Llewor
    Posted June 5, 2018 at 5:24 pm | Permalink

    Chris Grayling’s announcement of a third runway at LHR finally happened today. If it is accepted by the HoC, as soon as the work on the tunnel on the M25 is scheduled, people might want to avoid any travel on the M25 between junctions 15 (with M4) and 12 (with M3). We can look forward to some months (years?) of perturbed traffic. You were warned.

  3. DUNCAN
    Posted June 5, 2018 at 6:17 pm | Permalink

    Ah, the good old Eurozone. A term that conceals a multitude of crimes, sins and catastrophes and all propped up by German productivity.

    • hans christian ivers
      Posted June 6, 2018 at 7:24 am | Permalink

      Duncan,

      The productivity in most of northern Europe and France is 20 to 30% higher per producing hour than in the UK, so, that it is only German productivity just does not stack up

      • Edward2
        Posted June 6, 2018 at 7:47 am | Permalink

        Marvellous what you can claim using statistics.
        Productivity per producing hour….for the whole of Europe…calculated accurately.
        Hmm.

        • hans christian ivers
          Posted June 7, 2018 at 7:18 am | Permalink

          Edward2

          It was by country so stop playing what you might be, please

          • libertarian
            Posted June 7, 2018 at 11:01 am | Permalink

            hans

            Any comment on the facts that Eurozone exports for Q1 are -0.6% and going down

            While UK exports YTD are up 9.2% at £628.8bn

          • Edward2
            Posted June 7, 2018 at 12:18 pm | Permalink

            I realise it was by country.
            It doesn’t alter my scepticism of continent wide statistics of productivity which seem to be a new focus of the MMS.

      • a-tracy
        Posted June 6, 2018 at 8:57 am | Permalink

        Are our productivity figures worked out accurately hans? Do they reflect the number of people taking advantage of working flexible hours, and those continuing to work on over retirement age but just part-time, creating more part-time jobs for the other side of their job, and those working just 16 hours with top-up benefits, because you need two of those workers to equal just one full-time worker in say France that doesn’t have Family tax credits, child tax credits and housing benefits in the same way that we do. You are comparing apples with pears if it is just a headcount -v- turnover.

        We have many more people to employ in the UK than small Scandinavian Countries, we have much more immigration could Sweden even cope with half a million from one EU Country alone that England accommodated last year.

        • Posted June 7, 2018 at 7:12 am | Permalink

          The EU nationals moving to other EU countries tend to go for employment or retirement, not benefits tourism. The debate within the EU is not about migrant workers from EU countries, it is about genuine and false refugees. Illegal migrants (false refugees, undocumented arrivals) tend to go to countries with a “refugee-friendly” policy regime and that leads to a disproportionate number of non-EU migrants ending up in counytris like Germany, rather that less friendly ones like Poland (where over a million guest workers from Ukraine work now).

          • a-tracy
            Posted June 8, 2018 at 11:57 am | Permalink

            RH: So why did the EU want to protect benefit tourism so much that they were prepared to take our exit as a consequence of that?

            All they had to agree to do was stop the benefits until a certain period (I think it was four years was served in the UK paying in national insurance cover), it would have stopped your so-called ‘benefit tourism’ taking the countries housing priorities and family benefits.

        • hans christian ivers
          Posted June 7, 2018 at 7:23 am | Permalink

          Margaret,

          it is accurate statistics and it is not just small countries

  4. margaret howard
    Posted June 5, 2018 at 6:41 pm | Permalink

    Clutching at straws?

  5. LukeM
    Posted June 5, 2018 at 6:55 pm | Permalink

    Cost of living prices have being going up for a long time now with no real increase in wages so what can we expect? The spending power for most people is tighter. We are being told to shop around for a long time now but it makes little difference, competition in some of the major spending areas like energy is not working. Some strongly suspect price fixing by cartel is happening right under our noses and nothing is being done by government to confront this..agencies like Bank of England and various regulatory bodies are failing us by being too reactive instead of proactive.

  6. Adam
    Posted June 5, 2018 at 7:04 pm | Permalink

    Figure streams for each defined area go both up & down, & pass each other in cycles.

    So long as we are pedalling fast away from the EU into fitness, so much the better.

    We can leave all the peddling & meddling to others way behind.

  7. Blue and Gold
    Posted June 5, 2018 at 7:04 pm | Permalink

    Pretty good figures…but then we are in the European Union, so the good life continues.

    Without the support of the 5 newspapers that, no doubt, contributors on this site read, Brexit would not be happening.

    If those papers supported being in the said Union, we would not be leaving.

    Let’s see what the figures look like in say 5 years time, if God forbid , there was a Hard Brexit.

    The pound would have plummeted like a stone, it has still not recovered since the referendum and will doubtless fall further, pushing up the cost of living yet again.

    Don’t worry though, the Brexiteer politicians are a wealthy bunch and can take the hit, and they certainly won’t be caring about YOU suffering, financially.

    So..back to the current figures, nothing much to write home about, but then nothing has happened yet…….

    • Edward2
      Posted June 6, 2018 at 11:01 pm | Permalink

      There are also more than five newspapers that supported Remain.
      So your point is not well made

      • Georgy Llewor
        Posted June 7, 2018 at 10:45 am | Permalink

        Which ones? and with which circulation please as you appear to be an ace at statistics?

        • Edward2
          Posted June 7, 2018 at 5:01 pm | Permalink

          Thanks for compliment Georgy.

          Circulation is a factor of the popularity of each newspaper available for sale.
          You and I have free choice as to which ones we buy.
          I suggest you do what I did and do an internet search on UK newspapers and those that had an editorial policy for and against leaving the EU.

          • Georgy Llewor
            Posted June 8, 2018 at 3:54 pm | Permalink

            Here it is …
            On the Leave side:
            The Sun 1.55 Million of daily papers
            Daily Mail / MoS 1.34M
            Daily Telegraph / ST 0.38 M
            Daily Express/SE 0.34 M

            On the not so clear side:
            Evening Standard 0.88M
            The Times/ST 0.44M

            On the Remain side:
            Daily Mirror 0.58 M
            The i: 0.25 M
            FT 0.19 M
            Guardian/Observer 0.15 M

            For the recurrent comment about BBC radio and TV, no one is actually obliged to listen to them or watch them.

    • libertarian
      Posted June 7, 2018 at 11:06 am | Permalink

      B&G

      1) Who bothers to read newspapers in the 21st century? You are well out of date

      2) The BBC, Chan 4 and far more than 5 newspapers supported Remain… it didn’t help you

      3) UK Exports are up 9.2% whilst Eurozone exports have fallen Q1 -0.6%

      4) The Pound rose sharply against the Euro and Dollar Tuesday as traders responded to the latest IHS Markit services PMI

      5) The EU won’t exist in 5 years time

      6) You’re not very good at this are you?

  8. Herr Düher
    Posted June 5, 2018 at 7:09 pm | Permalink

    EU states have differing collection methods for statistics. There is the question of authenticity too. No-one quite believes the Spanish unemployment figures. It has been suggested many work in the black economy. The pressure must be on to produce sparkling shiny results. So, the EU stats for “no growth” probably mean the underlying truth is extremely bad and the “No Growth” headline is the best facade possible. Does not the word facade come from Italian ” facciata ” and French “façade” and Spanish “fachada” ? Our EU cousins may well be upfront but they have big behinds.

    • libertarian
      Posted June 7, 2018 at 11:07 am | Permalink

      HD

      No real business person relies on statistics produced by anyone . Its why Economics is such a failed subject .

  9. John
    Posted June 5, 2018 at 7:32 pm | Permalink

    Today I watched the BBC news saying that the rise in Sterling against the Euro is bad as it hits exporters.

    If they are not careful they will end up as a suicide cult.

  10. NickC
    Posted June 5, 2018 at 8:04 pm | Permalink

    We should remember the old adage that “turnover is vanity, profit is sanity”. Previous Conservative and Labour governments have imported millions of extra people to massage our turnover (GDP). Those additional people are still flooding in, so increasing our GDP but making each of us poorer. And “increasing” retail sales. Of course it is the same in the EU.

  11. Monza 71
    Posted June 5, 2018 at 8:56 pm | Permalink

    Our growth rate would be significantly better had Hammond not deliberately depressed demand by crippling the Buy To Let sector and doing immense damage to car manufacturing and sales by indecision and uncertainty over diesel engines and ridiculously high road taxes on mid-priced new cars.

    He should be replaced immediately.

  12. Lindsay McDougall
    Posted June 5, 2018 at 10:11 pm | Permalink

    It’s make your mind up time for politicians – whether or not you wish to help high street retail businesses or not.

    If you do want to help high street business, then reduce business rates on the high street and increase taxes of the costs of internet based businesses – for example by imposing rates on warehouse premises and increasing annual vehicle tax on white vans.

    If you don’t want to help high street business, then facilitate the replacement of some high street shops by housing – either by conversion or by demolition.

    In either case, put a stop to Amazon and Starbucks paying too little corporation tax.

  13. Ron Olden
    Posted June 6, 2018 at 4:30 am | Permalink

    RBS SHARE SALE

    Leaving aside the EU for moment perhaps John Redwood will raise the following with John McDonnell next time Mr McDonnell speaks in the House:-

    ”The question isn’t whether 271p is a fair price for these RBS shares now, but why Gordon Brown’s Labour Government paid 502p, a share ten years ago for bank which was not only worthless without State support, but was a serious threat to the Global Financial System.

    It should, like Bradford and Bingley, and Northern Rock, have been taken for nothing. Even that would have been generous. But needs must.

    Not long prior to that Brown was inciting (the then) Lloyds TSB (actually a sound bank at the time in which I had shares) to PAY to take over HBOS which was a near insolvent wreck, and Brown knew it.

    He nearly ruined Lloyds as well. It took me seven years, buying some more cheap, and paying into ‘Rights Issues’, to get my money back.

    One of the very few things that actually do require ‘regulation’ are banks’ capital ratios, Labour however regulates everything, but the things that really matter.

    If John McDonnell and all these loudmouths think these RBS Shares are worth more than this why don’t they, and the Trade Unions buy a few?

    But don’t hold your breath. They love gambling with (the call it ‘investing’) taxpayers money, but never do so with their own.

  14. Ron Olden
    Posted June 6, 2018 at 5:23 am | Permalink

    I think some of us pointed out that there were issues with the first quarter figures owing to the weather and the timing of Easter.

    And when we’re talking about what are after all, marginal changes in sales, it’s always best to be very careful. There must also be questions about the measurement of these figures at the moment owing to the move from High Street to On Line Retail.

    This slowdown is comparable with what’s been going on not just in the EU but in the USA and elsewhere as well. The UK is doing no better nor no worse.

    If I were the Bank of England however I’d be very wary about raising interest rates now. Just keep hinting at it so it’s no shock if it comes. But I wouldn’t loosen monetary policy either. Let’s wait and see.

    It’s always occurred to me that if any loosening of monetary policy is required it’s desirable that it take the form of a single QE equal to the sum required to pay the EU ‘Divorce Settlement’ (assuming we get something in return worth paying for), and then, save for the one or two joint projects we might still want participate in, we can forget about the residual balance of the EU Contributions from Day 1 of Brexit.

    Things look set fair at the moment. If required Fiscal Policy can be altered in the November Budget in time for Brexit which coincides with the start of the next Fiscal Year, and Monetary Policy at any time. There are also some big capital projects getting ready to go at the moment.

    But they also need a War Chest ready for the 2022 General Election. It might also be necessary to do something serious on Student Loans or Tuition Fees.

  15. Peter VAN LEEUWEN
    Posted June 6, 2018 at 6:52 am | Permalink

    No only does the Dutch economy still grow more than twice as fast as that of the UK, the year on year GDP growth in the R.o. Ireland is 7 x as much as that of N.Ireland (assuming that N. Ireland keeps pace with the rest of the UK. (source: tradingeconomics.com)

  16. hans christian ivers
    Posted June 6, 2018 at 7:27 am | Permalink

    John,

    Great news for new growth in the UK, but it does not hide the fact that we have had four quarters of less growth than all other countries in the G7 and this has not happened at any time in the past 12 years, so the lack of certainty on Brexit is having a major impact on the level of investments in UK business for the moment and we are paying for it with lower growth and higher inflation than all of the rest of Europe.

    Reply The growth slowdown is nothing to do with Brexit!

    • hans christian ivers
      Posted June 6, 2018 at 7:53 am | Permalink

      John,
      The lack of confidence is due to the uncertainty of what the new deal with the EU is gong to look like , so saying the slowdown has nothing to do with Brexit, I am afraid is just nonsense

    • Denis Cooper
      Posted June 6, 2018 at 12:09 pm | Permalink

      As has been repeatedly pointed out, most recently here:

      http://johnredwoodsdiary.com/2018/05/22/uk-net-debt-down-by-18-5bn/#comment-936348

      the growth slowdown started in the autumn of 2012.

      If in the future somebody said to me:

      “You know that EU referendum really hit our economy”

      then I would ask if they thought the referendum had been held around the end of 2007, and that was why our GDP had then shrunk by 6% in just one year.

    • margaret
      Posted June 6, 2018 at 1:34 pm | Permalink

      reply to reply : There must be something of an unsettling nature that can be directly linked to Brexit although not the whole picture.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, He graduated from Magdalen College Oxford, has a DPhil and is a fellow of All Souls College. A businessman by background, he has been a director of NM Rothschild merchant bank and chairman of a quoted industrial PLC.

  • John’s Books

  • Email Alerts

    You can sign up to receive John's blog posts by e-mail by entering your e-mail address in the box below.

    Enter your email address:

    Delivered by FeedBurner

    The e-mail service is powered by Google's FeedBurner service. Your information is not shared.

  • Map of Visitors

    Locations of visitors to this page