The UK shopper strikes yet again!

This morning has brought an example of something which is both remarkable and familiar. You might argue that you cannot use those two words together but 2020 is a year that continues to defy convention. What I am referring too is more good news for the UK economy from this sector.

In October 2020, retail sales volumes increased by 1.2% when compared with September; the sixth consecutive month of growth in the industry.

This means that the annual picture looks really rather rosy too.

In October, the year-on-year growth rate in the volume of retail sales saw a strong increase of 5.8%, with feedback from a range of businesses suggesting that consumers had started Christmas shopping earlier this year, further helped by early discounting from a range of stores.

In recent times the pattern has changed with for example Black Friday being in a week’s time and there is also Cyber Monday. Some Black Friday offers seem to have already started, if the advertising I see is any guide. So the structure underlying seasonal adjustment has been changing and maybe there has been another shift this year. Thus there may be a hangover from these numbers but we simply do not know how much it will be?

If we try to compare we the period pre the pandemic we see another strong recovery and then boom.

Looking at October’s total retail sales values (excluding fuel), which is a comparable measure to our online series, sales increased by 7.9% when compared with February; driven by a strong increase in sales online at 52.8% in comparison to reduced store sales at negative 3.3%.

From all the deliveries I see happening the online numbers are hardly a surprise, but with Lockdown 2.0 now adding to the problems I fear for quite a bit of the high street.

So we do have a V-shaped recovery for one part of our economy and I guess the orders for the economics text books are already on their way to the printers.

What this has done is out the switch to the online world on speed with food sales seeing a particular boom. That will be fed by the stories that Covid-19 is being spread by supermarket visits.

In October, we can see that online sales for all sectors increased when compared with February. Online food sales nearly doubled, with an increase of 99.2% in comparison with food store sales, which saw a fall of 2.1%. Overall, total food sales increased by 3.4% when compared with February.

Clothing stores, with an overall decline of 14.0% in value sales, increased their online sales by 17.1% but saw the biggest fall in store sales at negative 22.1%.

The area which has most struggled does not really have an option for online sales.

In October, fuel sales still remained 8.8% below February’s pre-lockdown level, while car road traffic reduced by an average 14.2%.

Looking at the overall picture it is also a case of Shaun 1 Bank of England 0 because my case that lower prices lead to growth has got another piece of evidence in its favour.

This was the sixth consecutive month of growth resulting in value and volume sales 5.2% and 6.7% higher respectively than in February 2020, before coronavirus (COVID-19) lockdown restrictions were applied in the UK.

With value growth or if you prefer expenditure in Pounds lower than volume growth there has been disinflation or price falls combined with volume growth. For newer readers I first made the point formally on here on the 29th of January 2015.

Looking ahead that boost may now fade as October gave a hint of a change of trend.

All measures in the total retail sales industry saw an increase in October 2020. The monthly growth rate for value sales was 1.4% and for volume sales 1.2%.

It may take a while to note anything like that as Lockdown 2.0 will affect the December and particularly the November numbers.

Public Finances

These too were numbers that the forecasters got wrong by quite a bit. So today was yet another failure as Retail Sales were supposed to flat line and borrowing be much higher.

Public sector net borrowing (excluding public sector banks, PSNB ex) is estimated to have been £22.3 billion in October 2020, £10.8 billion more than in October 2019, which is both the highest October borrowing and the sixth-highest borrowing in any month since monthly records began in 1993.

Of course, we are borrowing extraordinary amounts so this is relatively good news rather than being outright good. As you can see below a more than half of the rise is extra central government spending.

Central government bodies are estimated to have spent £71.3 billion on day-to-day activities (current expenditure) in October 2020, £6.4 billion more than in October 2019; this growth includes £1.3 billion in Coronavirus Job Retention Scheme (CJRS) and £0.3 billion in Self Employment Income Support Scheme (SEISS) payments.

Also revenues have fallen and some of that is deliberate with the VAT and Stamp Duty cuts.

Central government tax receipts are estimated to have been £39.7 billion in October 2020 (on a national accounts basis), £2.7 billion less than in October 2019, with falls in Value Added Tax (VAT), Business Rates and Pay As You Earn (PAYE) income tax.

You might think that the balancing amount was local councils especially after the blow up in Croydon, which for those unaware is below.

Cash-strapped Labour-run Croydon Council has imposed emergency spending restrictions with “immediate effect”, the BBC has learned.

The Section 114 notice bans all new expenditure at Croydon Council, with the exception of statutory services for protecting vulnerable people.

A document seen by the BBC said “Croydon’s financial pressures are not all related to the pandemic”.

It is under a government review amid claims of “irresponsible spending”.

Section 114 notices are issued when a council cannot achieve a balanced budget. ( BBC News)

However the main other recorded component was the Bank of England at £2.8 billion. This is really rather awkward as it has not actually borrowed anything at all! But a Monty Python style method records it as such and it is the first time I can recall an issue I have regularly flagged about the national debt so explicitly affecting the deficit as well.

National Debt

So without further ado here is the misleading headline that much of the media has gone with today.

Public sector net debt (excluding public sector banks) rose by £276.3 billion in the first seven months of the financial year to reach £2,076.8 billion at the end of October 2020, £283.8 billion more than in October 2019.

This is misleading because it includes the activities of the Bank of England which are not debt. I am no great fan of the Term Funding Scheme but recording its £120 billion as all being debt is quite extraordinary and is a major factor leading to this.

If we were to remove the temporary debt impact of these schemes along with the other transactions relating to the normal operations of the BoE, public sector net debt excluding public sector banks (PSND ex) at the end of October 2020 would reduce by £232.9 billion (or 11.3 percentage points of GDP) to £1,843.9 billion (or 89.5% of GDP).

It makes quite a difference especially for fans of debt to GDP ratios as we go from 89.5% to “around 100.8% of gross domestic product” on this really rather odd road.


The continued growth of UK retail sales is good news as we see an area that has recovered strongly. This comes with two caveats. The first is that with out enthusiasm for imports it poses a danger for the trade figures. The second is that in a tear with so many changes I doubt any survey is completely reliable so we are more uncertain that usual.

Switching to the public finances and taking a deeper perspective we are posting some extraordinary numbers.

Public sector net borrowing (PSNB ex) in the first seven months of this financial year (April to October 2020) is estimated to have been £214.9 billion, £169.1 billion more than in the same period last year and the highest public sector borrowing in any April to October period since records began in 1993.

We seem set to keep spending more in some areas ( defence) but want to cut back in others ( public-sector pay) so all we can do at the moment is be grateful we can borrow so cheaply. Even the fifty-year Gilt yield is a mere 0.77% and as I have written before at these levels I would issue some one hundred year ones as the burdens are not going away anytime soon.

My theme that low inflation helps economies also gets support from the public finances.

Interest payments on the government’s outstanding debt were £2.0 billion in October 2020, £4.4 billion less than in October 2019. Changes in debt interest are largely a result of movements in the Retail Prices Index to which index-linked bonds are pegged.

The Bank of England never gets challenged as to why it keeps trying to raise our debt costs in this area. Also you see another reason why the establishment wants to neuter the Retail Prices Index ( RPI)






28 thoughts on “The UK shopper strikes yet again!

  1. With so many on furlough and suggestions that the public has brought forward there Christmas shop I am not sure that a 1.2% rise gives any indication whatsoever as to the mood of the consumer neither an indication of where retail sales are going from here.

    Black Friday has already distorted Christmas spending and the corona effect has probably distorted retail sales further.

    The press comments thus far seem to suggest poorer figures going forward.

    • UK consumers spend up in October but GFK says:

      “Consumer confidence has fallen to its lowest point since May, according to the latest report from GfK.

      The market research firm’s consumer confidence index fell two points to -33 in November, down to its lowest levels since May.

      When asked about their confidence in personal finances in the next 12 months, respondents said their confidence deteriorated five points to a score of minus five, from zero in October.”

      If these figures are anything to go by Joe Public has already done some of their Christmas shop early due to lockdown restrictions and the figures for November & December will be poor.

      Lots of retail jobs will come off furlough as companies go bust adding to the out of work, some will find jobs on retail taking on as they do for Christmas but after Christmas there will be mass retail lay offs as the New Year sales end and the quarter rents become due.

  2. I think UK consumer spending will hold up as long as the housing market does, since the amount being spent on home improvements/extensions is steady or improving, and the belief in the consumer that house prices can never go down persists and the positive sentiment of those people remains, spending will remain strong.

    It may seem counter intuitive to the conditions we are struggling to survive under, but central banks will defend their property markets with everything at their disposal, because if they don’t, consumer spending will collapse

    • I don’t think spending will hold up; I think it’s a case of, “We’ll have a reasonable Christmas, but that’s it.”

      Much like people spending on SKY TV subscriptions, rather than have a holiday, at 5-6 times the cost, during “austerity”.

      • You are probably right, its difficult to tell at the moment we will know better the next two months and after Christmas. The press from what I have been reading seem to think many have brought forward their Christmas spend.

        There could be a number of reasons for this, lockdown and not wanting to get into a online que, some retailers have had to restrict online orders so get it out of the way before busy period starts.

        Many on furlough have had plenty of time on their hands to buy now and there have been press comments about false Black Friday deals so may wont bother on the day or week when the frenzy starts.

        The consumer is getting very canny these days and not easily drawn in with special deals its quite easy now to compare prices online these days.

  3. Living in Croydon you have pressed my button.

    They spent a 6 figure sum putting 20 mph signs up all over the borough. A good idea and will save lots of lives and injuries…except that I am the only person driving at the required limit. This causes lots of dangerous driving as people take all kinds of risks to overtake me.
    If they enforced it then they could put a lot of money into the council’s coffers. But when they put policemen on the road side they have to be clearly visible from a distance so they don’t catch anyone. (A radar gun and camera cost less than £300 on Amazon. I would happily stand on the road outside my house for an hour a day if they gave me a fiver for everyone I caught.)

    I could think of many other descriptions rather than ‘irresponsible’. This is not the only example.

    I think that for local councilors (of any political party), BoE governors, MPC members and central bankers in general, the skills and abilities that get you the job automatically disqualify you from being able to do the job.

    • Hi Chris

      It has been a while since I have been to Croydon. But in Battersea there seems to be a lack of traffic policing as well. The e-scooter craze has taken root here and some are doing well over the supposed 15 mph limit. I even saw one by Clapham Junction station that looked like it had a seat on it! In short not even some e-scooters would be obeying a 20 mph limit here.

  4. Shaun,
    Today’s Wolf St blog indicating shift to E commerce this last 9 months accelerated equivalent of 2 or 3 years by pandemic.
    Now see supply/ demand play out e.g. public sector wages vs unemployment as well as resistance to Tesco £9 charges for home delivery . Increase in prices likely to be difficult in 2021 especially as internet usage increases.

    • …spent a 6 figure sum putting 20 mph signs up all over the borough. A good idea and will save lots of lives and injuries…except that I am the only person driving at the required limit. This causes lots of dangerous driving as people take all kinds of risks to overtake me.
      Years ago, prior to doing the same where I lived, there was a council “consultation” on doing the same.
      I pointed out that, since there were young children who play in our street, that responsible drivers were already doing 20mph or less, & that those who ignored the 30mph speed limit were unlikely to obey a slower limit so was a waste of time & money.
      We still got the pink concrete, & this was at the heights of austerity, when libraries were closing & services to the old and disabled were being withdrawn.
      Both cases show that I was, sadly, right.

      • I used to live in Oxford and, sad to say, my experience was identical. To drive at 20 invited ludicrous overtaking in the middle of the city.

      • per mile /KM billing will mean auto matic speeding fines . in ten years the car will drive itself. If you can afford one . speed linits auto enforced so no money there. Same for any so called “congestion zones”

        got a cae with out AI , try getting insurance for it …….

        tracking worries ? pfft! why haven’t you dumped yer iphone/ipad yet ? laptop ? try hiding yer IP and cookies? well some sites will not work unless you enable them- many popular ones at that.


  5. It seems to me that there are many factors behind these movements and I agree with Chris Longs that Covid has given further impetus to them. I am no expert, but I fear for the High Street even if Covid disappeared tomorrow, for the following reasons:
    1. People are far more used to on-line sales. Even a friend’s 90-year old parents use on-line all the time, as they don’t want exposure to the disease by leaving home and have learned how to shop on-line in 2020;
    2. We have all been locked up and get on-line a lot more than before;
    3. High Streets need an attractive atmosphere to get people to go there. My experience at the moment is that they are rather depressing places to go. Boarded up shops, empty premises, very few people around, coffee shops closed, so no social element to the trip;
    4. The closure of some anchor shops. In Newbury, my nearest big town, John Lewis has closed the branch for good and, at the other end of the street is Debenhams, so I guess that this will go too. Losing these shops will, I expect, reduce footfall for everyone else. The car park in the town centre is never remotely full now;
    5. Delivery of on-line products is much better now – if you are not in, they leave outside and take a photo for example and you can often get a one-hour window and you get calls, texts etc. Also, it is clear that many people will work from home in future, rather than the office, so it doesn’t matter when the parcel gets home;
    6. You can get home service for almost anything now. Our local laundry service offers hampers/wine/ Xmas presents etc etc all brought to your door.
    I have no great affinity for the big retailers, but I do worry that the social element of people meeting in the centre of towns will have a bad effect on society. Shaun’s numbers above seem to me to be a reflection that we are going to be more isolated, covid or not.

    • Could not agree more. Why is there any need to visit you local town centre when most of what we need can be done from home? Towns can’t compete with online shopping and retail parks, and now why is there a need to visit, the bank, the library, the post office?
      Local Councils have not helped with waiting restrictions, road closures and ever increasing car park charges.
      And know they want us to travel there by foot or by bike and leave the car at home, in the middle of autumn/winter when it’s cold, windy and wet?
      Not an attractive offer!

  6. Hello Shaun,

    Although I have posted before that the SARS-2 epidemic will be fading away by March/April next year the next 3 months will see more panic measures by HMG as flu season bites in Jan/Feb.

    I predict ( whoa there Forbin! ) that we’ll see more lock downs ( already published ahead if today’s papers are to believed ) for at least those months because mainly HMG would not want to been seen to be wrong ( maybe we’ll not need 38 billions worth of vax , hard to be certain , and if its true Australia has a mutated form , no guarantee what we paid for will work )

    Then throw in a Brexit goof and we’re good !

    Hey look, there’s room on the sofa and fresh popcorn 😉


    • Forbin, they have not even “isolated” that virus. FOI requests around the world have revealed that no Govt lab has the virus properly documented. Do you have a virology background?

    • Australia. The Covid “mutation” was a guy who picked it up collecting a Pizza. Cue panic as he must have been infected in record time, hence scare and Lock-down. Turns out that he “Forgot” to mention that he actually WORKED in the Pizza parlour next to a guy who had tested positive. City fathers regretted that lying was not a crime they could prosecute.

  7. Hello Shaun,

    I wonder how much shopping will be needed for pay this back …..

    “UK to unveil record £400 billion borrowing plan next week”

    HMG can finance what it wants in the current climate because every one else will be doing the same, good rates to be had ………

    I just hope we’ll have something to show for it ! *


    * accounting for inflation that won’t be as many empty popcorn bags as I expect 😉

    • Remember I posted about Boris & “Build Back Better?”
      That’s proof that he’s a globalist & I fully expect him to betray Brexit & the British people.

  8. From:
    “Croydon is one of a number of English councils that piled into the latest local government craze: snapping up commercial assets using cheap government-subsidised debt that was provided with almost no questions asked by an official body, the Public Works Loans Board. Much of this went on property. Local authorities spent £6.6bn on real estate between 2016-19, according to the UK’s National Audit Office — 14 times more than in the previous three-year period.”

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