the business ladder

After two months of falls, retail sales recovered in October though government borrowing hit another record high for the month, reinforcing the need for government austerity measures.

Mortgage lending figures remained weak and a modest improvement in manufacturing orders has done little to change the view held by many that consumer spending will remain subdued regardless of any economic recovery.

Retail sales figures have been low since the summer and the ‘last-minute’ rush to make purchases before the VAT increase in January 2011 has not materialised.  

Philip Shaw of Investec commented: "The more important question is what retail sales do going forward, and after the VAT hike in January, and over the rest of the year as the fiscal tightening gets into gear.”

The Office for National Statistics reported that sales volumes rose 0.5% last month, a faster rate than the 0.4% rise forecast and reversing the downward fall of 0.5% in September. However, as expected, the annual rate dropped to -0.1%, the first negative indicator since January.

The owner of retail group Arcadia, Sir Philip Green, stated that he expected trading to get tougher in 2011: "You have to be concerned that people are going to be even more discerning than they have been," he said. "The assumption is it has to get tougher. You've got to be realistic."

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