While Tesco reshapes its ailing UK arm, pulls out of the US and takes a step back in China, there is one part of the business which has its own issues. Tesco’s problems in central Europe are twofold.

While Tesco reshapes its ailing UK arm, pulls out of the US and takes a step back in China, there is one part of the business which has its own issues. Tesco’s problems in central Europe are twofold.

Firstly, the wider economic issues its consumers are facing are restricting spending severely across multiple markets. And secondly, chief executive Philip Clarke’s priorities lie elsewhere; the focus is very much on rescuing the UK and it will be for some time to come.

The challenges for the European economy are some way off resolution and there is nothing Tesco can do to speed up the process. Tesco must encourage shoppers to visit its stores by retaining a promotional stance in order to remain competitive.

Tesco speaks of ‘change programmes’ in its central Europe and Turkish markets which it claims will start to benefit the business throughout its second half, however there is little evidence of what these measures are or how they can positively impact the business.

In reality, Tesco must continue working to insulate itself as much as possible from declines in consumer spending, but there is no cure-all strategy. Aside from cutting back on expansion and investing more on its existing estate, there is little more Tesco can do other than sit tight.

Philip Clarke has bigger issues to tackle, namely and importantly focussing on and investing in the UK core. Europe accounted for just 14.4% of group revenues in first half of 2013/14 and quite rightly Tesco has realised the need to strengthen this core business before it starts to invest heavily in international expansion again.

Regrouping is essential for the retailer, throwing money at a problem in Europe which it just can’t solve at the moment is pointless and Tesco is right to display prudence.

Andrew Stevens is a senior retail analyst at Verdict Research