The UK has slipped back into recession. The dreaded double-dip, which most commentators expected us to avoid, is a reality for the first time since the 1970s.
The UK has slipped back into recession. The dreaded double-dip, which most commentators expected us to avoid, is a reality for the first time since the 1970s. GDP figures, out on Wednesday, showed the UK economy shrank by 0.2% in the first quarter.
It is worth noting the figures are provisional, with a margin for error of 0.2% – up or down. The best case is stagnation, and no recession. The worst is a slump towards a 0.4% contraction. These margins will mean little for the retail sector, which is at the sharp end of weak consumer confidence, damaging levels of unemployment and stubbornly high inflation.
Far more relevant were figures released a day earlier, which showed family spending power at its lowest since the collapse of Lehman Brothers in 2008. As well as a growing, and worrying, divide between North and South, the numbers from grocer Asda revealed that UK families were £10 a week worse off in March than a year earlier.
Carpetright and Allied Carpets brought a stark reminder this week of the reality of this trend, the former warning of a further decline in profits, the latter falling prey to its third administration.
Against this backdrop it’s all too easy to dismiss the technicalities that determine ‘recession’ or ‘no recession’ as just numbers for economists to crunch and politicians to argue over.
And yet, technicalities matter. They shape behaviour and influence perceptions. As we head into a summer that so many hope will see a surge in the feel-good factor retailers must work hard to ensure that consumers do not simply snap their purses shut in fright, and pull out the stops to win spend.
A credibility gap
Bad news comes in threes and so it has proven for Supergroup, which has been forced to issue its third profit warning in the space of six months, this time on the back of accountancy errors in its forecasting.
Within 10 minutes of the stock market opening on the morning of the announcement, the fashion group could only look on as a third was wiped off its value. SuperGroup is no longer a start-up and the market’s reaction demonstrates it won’t afford the retailer any luxury around hitches of this nature. The new management team will be expected to deliver credibility quickly.