Optimism among Britain’s retailers is at its highest for more than six years as the high street builds on the momentum of the warmer weather and World Cup, the CBI said yesterday.
According to the business group’s distributive trades survey, a 45% balance of retailers predict stronger sales next month, the best since June 2004.
A far higher than expected 33% balance also reported stronger sales volumes in July the best outturn since April 2007 – with grocers, clothing and footwear stores leading the way.
Early discounts have boosted the high street.
The survey measured sales between June 23 and July 14, and covered 131 companies. It comes after official figures for June’s retail volumes also showed a higher than expected 0.7% rise over the month.
The CBI’s head of economic analysis Lai Wah Co said the optimism among retailers was “promising” but added: “We still expect the recovery in overall consumer spending to be fairly restrained, however, given concerns about the impact of public spending cuts and weak prospects for real take-home pay in the coming year.”
High street spending is likely to take a further dent next January when VAT is hiked to 20% as part of Chancellor George Osborne’s deficit-tackling measures.
IHS Global Insight’s Howard Archer said: “The suspicion remains that further out consumers are likely to find life hard and will be constrained in their spending . . . households already face high unemployment, muted earnings growth, elevated debt levels and high fuel prices.
“There is also the possibility that the Bank of England could raise interest rates before the end of the year due to heightened inflation concerns.”
CBI Scotland’s assistant director, David Lonsdale, said: The upcoming rise in VAT may spur shoppers into some advance purchases in order to avoid paying the extra tax. This could provide Scottish retailers with a further, albeit temporary, fillip later this year.”