IT HAS been a long time coming, with plenty of diversions such as numerous administrative receiverships and the grim reaper of internet competition, but Britain’s retailers are entering the new year remarkably sanguine. More than three out of four predict a rise in sales and staffing during 2015 compared with the year just ended.
And about two out of three say they plan to invest more into their businesses, according to the survey by the British Retail Consortium (BRC).
I suspect the optimism of many in the industry has its roots in the perceived easing of the pressures on consumer spending, typified by wage growth now beginning to outstrip – admittedly low – inflation.
That weak inflation should also keep interest rates down for some time yet, with Bank of England governor Mark Carney having said repeatedly than even when rates lift from historic lows of 0.5 per cent, the increase will be gradual and to levels generally lower than in previous economic cycles.
That should also help underpin recovering, if still relatively fragile, consumer confidence, and that should this year.
The retail sector hopes this gathering confidence about UK economic prospects, with unemployment also remaining low, will have us merrily spending well after the festive season has passed.
Even with the BRC caveat of the current tentativeness of the recovery in consumer confidence, it is clear most retailers believes the glass of prospects is more half full than half empty – markedly different than the downbeat feel of recent years.
A further shot in the arm for the sector has been Chancellor George Osborne’s decision to review business rates, a bugbear for retailers for decades.
The shadow of the financial crisis and ensuing recession was a long one for the high street. Blacks Leisure, Blockbuster UK, Clinton Cards, Comet, HMV, Jessops, JJB Sports and Woolworths were just some of the businesses that either failed or have been radically slimmed down.
And the big supermarkets in particular are unlikely to share this generally more confident air as we enter 2015. There has been too much food price deflation and systemic change in the way people use the big grocers to dispel their concerns.
But, after the extended malaise among the wider retail sector, let’s take the more upbeat sentiment wherever we find it, and hope that the nascent, if guarded, optimism is proved justified as the year progresses.
Plummeting oil price hits workers’ pockets
Less happily, the news that thousands of self-employed North Sea workers are having to take the slump in oil prices on the chin as the energy majors cut back on costs and explorations was predictable.
It is said those workers are facing pay cuts of up to 15 per cent, which is hardly a nice way to meet the New Year.
Aberdeen has been a boom town for many years on its connection with the North Sea energy industry. That is not going to change overnight. But, with oil currently at a five-year low of about $56 a barrel – 50 per cent down on its level just six months ago – there were bound to be repercussions for projects and pay in the largely ageing energy fields of the region.
In the short-term, there also seems little likelihood the oil price and energy investment will recover. It really is a case of battening down the hatches.
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