The High Street endured its poorest festive season for three years, the British Retail Consortium (BRC) has reported.
Like-for-like sales grew by just 0.3 per cent in December compared with 2.5 per cent for the same period a year ago.
The rate of growth in sales for last month was also the weakest since March 2006.
Kevin Hawkins, the BRC’s director general, said: “This result is somewhat worse than we expected and points to a very challenging first half for 2008.”
Mr Hawkins urged the Bank of England to help combat the prospect of an economic slowdown with a cut in interest rates to 5 per cent: “Given that the full effects of the Bank’s previous increases in interest rates have yet to be felt by many households, retailers and manufacturers alike need a rate cut now – preferably a full half-point.”
Other business groups agree.
Steve Radley, chief economist of the EEF, said: “The evidence from the past month points to a growing risk of a weaker economy at home and abroad. While manufacturing has been in good shape, it would not be able to escape the negative effects of a downturn in domestic and export markets. The Bank therefore needs to act quickly to offset the impact of deteriorating financial conditions on the UK economy.”
David Kern, economic adviser to the British Chambers of Commerce, commented: “The unusual pessimism that has greeted the start of 2008 exacerbates the risks that consumer and business confidence will decline, and strengthens the case for a modest cut in UK interest rates to 5.25 per cent.”
Mr Kern added: “While a 2008 economic slowdown is inevitable, a recession can be avoided if correct measures are adopted without undue delay. The ominous messages conveyed by the Bank of England’s new Credit Report highlight the vital need for the MPC to support the banking system, alleviate the credit squeeze, and prevent a further loss of confidence. A small cut in UK interest rates on Thursday would reduce the risk that dangerous emergency measures would be needed later in the year.”
Date:8 January 2008
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