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Financial News: UK Budget Deficit At Record High; Retail Sales

UK Budget Deficit At Record High; Retail Sales Fall At Fastest Pace Ever

05/22/2020 - 09:31:00 (RTTNews)

(RTTNews) - The stimulus measures taken by the British government to shield the economy from the downturn posed by the coronavirus, or Covid-19, have pushed the budget deficit to a record high in April, data published by the Office for National Statistics showed on Friday.

Another report from the ONS showed that high street sales declined at a record pace in April as many stores were temporarily closed to contain the spread of coronavirus, or Covid-19.

Public sector net borrowing excluding public sector banks was GBP 62.1 billion in April, which was GBP 51.1 billion more than in the same period last year. This was the highest borrowing in any month since records began in 1993.

The ONS said the Covid-19 pandemic is expected to have a significant impact on the public sector finances and these are initial estimates. Borrowing in the latest financial year ended March 2020 was estimated to have increased by GBP 22.5 billion from last year to GBP 62.7 billion.

While the small easing of the lockdown on May 13 probably meant the government did not have to borrow quite as much this month as in April, it's clear the government will still have to borrow a few hundred billion pounds this year, Ruth Gregory, an economist at Capital Economics, said.

At the end of April, public sector net debt excluding banks totaled GBP 1,887.6 billion or 97.7 percent of GDP.

The Office for Budget Responsibility said April's public finances data provide an initial taste of the fiscal hit from the coronavirus lockdown and the government support for individuals and businesses.

In April, retail sales volume declined 18.1 percent on a monthly basis, which was the biggest monthly fall on record. Economists had forecast sales to decrease 16 percent after falling 5.2 percent in March.

Excluding auto fuel, retail sales were down 15.2 percent on month, bigger than the economists' forecast of 15 percent and a 3.8 percent decrease seen in March.

Food store sales decreased 4.1 percent, while non-food store sales plunged 41.7 percent.

All sectors reported a monthly fall in April except non-store retailing and alcohol stores. Clothing sales plummeted 50.2 percent.

On a yearly basis, retail sales volume fell 22.6 percent versus March's 5.8 percent decrease and economists' forecast of 22.2 percent.

Excluding auto fuel, retail sales dropped 18.4 percent following a 4.2 percent drop in March. Economists had expected an 18.2 percent decrease.

Earlier in the day, survey from the market research group GfK showed that the consumer confidence weakened to -34 in May from -33 posted in the end half of April.

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