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Free AccessMNI DATA IMPACT: UK April Sales Collapse, Gov Borrowing Surges
By Laurie Laird
LONDON (MNI) - UK debt rose to its highest level as a percentage of GDP
since fiscal year 962/63 in April, as coronavirus-related spending hit the
government accounts, while retail sales suffered a record fall.
The following are the main points from the public sector finance and retail
sales reports for April released on Friday by the Office for National
Statistics.
- Government borrowing rose to a record GBP62.1 billion in April as Covid
spending hit the books, taking the debt as a ratio to GDP (including Bank of
England) to 99.7%, the highest since the 1962/63 fiscal year. Statisticians
cautioned that the increased ratio reflects rising borrowing as well as
projected sharp falls to GDP.
- Retail sales plunged by a record 18.1% in April, underperforming
already-grim forecasts of economists. Almost every category of sales recorded
sharp declines: Clothing and footwear fell by 50.2%; household good sales
plunged by 45.4%. Food sales declined by a record 4.1%, as highlighted in the
MNI Reality Check.
- Borrowing for the 2020/21 fiscal year was also revised sharply higher, to
GBP62.7 billion from the GBP48.7 billion reported last month. The revision
reflects additional spending for Covid-19 support schemes and reduced VAT and
corporate tax receipts. That left borrowing (including Bank of England
purchases) at 93.3%, also the highest since the 1962/63 fiscal year.
- VAT cash receipts were negative in April, for the first times since
records began in 1987. That means the Treasury VAT rebates exceeded receipts by
GBP900 million last month.
- Public finance data will "certainly" undergo further revisions in months
to come, according to a statistician, adding that even in ordinary times,
full-year spending data don't "settle down until round about September."
- April retail sales may be less subject to revision, with the response
rate to the ONS survey hitting 82%, only slightly below the typical return of
85%. The drop in Q1 sales was revised slightly upward to -1.5% from the
originally-reported -1.6%, but that is unlikely to effect the 0.09 percentage
point drop in Q1 GDP, according to a statistician.
- Internet sales provided a ray of brightness in a bleak retail sales
report, with online transactions surging by record-high 15.8% between March and
April, taking internet commerce to an all-time high of 30.0% by value last
month.
- Retail sales had been weakening even before the coronavirus shock. Sales
declined by a record-high 8.6% in the three months to April, the seventh
straight month of no growth, the longest stretch of weakness since the nine
months ending in January of 2009.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: MABDS$,M$B$$$,M$E$$$,MT$$$$]
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.