How significant are Black Friday and Christmas in influencing UK retail sector?

Sam Miley, managing economist and forecasting lead at Centre for Economics and Business Research spoke to CGTN Europe on UK retail sales.

Transcript

00:00 Let's talk now to Sam Miley, who's Managing Economist and Forecasting Lead at the Centre

00:04 for Economics and Business Research. Good to see you, Sam. Thanks for joining us. So,

00:08 it seems that Black Friday has boosted retail sales. How helpful are these kind of events

00:13 for shops and for sales figures? Well, the last two months of the year make up a disproportionate

00:21 level of activity for the retail sector. So, events like Black Friday and the run-up to the

00:27 Christmas period really are all important for the sector. Will it last though? Are we going to

00:33 keep shopping? Well, the wider fundamentals for the UK economy are particularly weak and therefore

00:42 the viewpoint that I would suggest is that today's data on retail were more of a flash in the pan

00:49 than something that can be expected to continue in the long term. Therefore, as we move beyond

00:55 the festive period, the woes for the retail sector may well return. Quite a lot going on in the UK

01:00 economy. I want to ask you about inflation. First of all, we saw a significant drop in that last

01:05 month. Do you think that will encourage people to spend where they might not have before?

01:10 So, although it is correct that inflation has slowed in recent months, I would make the point

01:17 that inflation remains considerably above the Bank of England's 2% targets and indeed considerably

01:24 above levels that consumers have become accustomed to in the UK. Therefore, even though inflation is

01:31 slowing, we anticipate consumers to face continued pressure for some time and this would have a

01:38 dampening effect on the economy as a whole. And we've also had these figures out, haven't we,

01:42 showing the UK economy is close to a technical recession after shrinking in the last quarter.

01:47 How do you think that might change people's thinking, both consumers and policy makers?

01:53 Well, here at CBR, we have been forecasting the UK economy to enter a technical recession

01:59 for some time and the revisions to this morning's data make that possibility all the more likely.

02:06 In terms of the dampening effect on policy makers, this could potentially have implications

02:13 for monetary policy decisions into 2024 and indeed from a fiscal policy stance, whereby

02:20 policy makers may look to encourage growth. In terms of the impact on the wider economy,

02:28 the word recession can never be good for improving sentiment. So in that sense,

02:34 it could well be another tough year in 2024.

02:36 Well, let's talk about that monetary policy. Plenty of discussion of when rate cuts will come in.

02:43 What do you think, sooner or later?

02:47 Our view at CBR is that the Bank of England will maintain rates for another couple of meetings,

02:54 commencing with rate cuts from around the middle of Q2 next year. So our eyes are on the May or

03:02 June meetings. Beyond that point, we would expect the Bank of England to implement a gradual cutting

03:09 process for the rest of 2024 and beyond.

03:13 Sam, good to talk to you. Thank you for joining us. That's Sam Miley from the Centre for Economics

03:18 and Business Research.