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By David Milliken and William Schomberg
LONDON (Reuters) – British retail sales surpassed their pre-coronavirus point in July, the first full month opened by retailers to promote non-essential products since the country entered lockout in March.
Separate knowledge of government loans showed that public debt exceeded 2 trillion pounds ($2.65 billion) in July for the first time and reached 100.5% of gross domestic product, its share of GDP since 1961.
Surprisingly powerful retail sales figures physically showed strong customer demand as other sectors of the economy struggle to recover from recent heavy losses.
Retail sales volumes increased by 3.6% since June, most commonly according to a Reuters economist survey, and were 1.4 percent higher than in July 2019, the Office of National Statistics said.
This represented a recovery after double-digit falls in April and May.
Compared to February, before Britain was largely affected by the pandemic, sales increased by 3.0%.
“This increase in retail intake would possibly dispel considerations about the fragility of the UK economy, but not for long,” said Alistair McQueen, Aviva’s director of savings and pensions.
The UK retail sector has recovered much faster than almost all other parts of the economy affected by the blockade of coronavirus. But there have been contrasting reports for other retailers.
Supermarkets and other food outlets have benefited from the fact that the British have more dinner at home. Online sales skyrocketed and retail homeware outlets experienced strong demand.
Other spaces suffered, with sales of clothing and footwear still 25% less than a year ago.
Companies such as Marks and Spencer and Boots Economists are involved in the overall recovery in the retail industry being temporary. “July retail sales are likely to peak this year,” said Samuel Tombs of Pantheon Macroeconomics. In addition, unemployment is expected to rise dramatically once a government employment program is hald by the end of October. The government’s emergency funding and fiscal revenue deficit are expected to bring this year’s borrowing to a record 322 billion pounds. The same was in 2019 The debt of the matrix in July alone was the lowest since the start of the pandemic with 26.7 billion pounds. July is a month in which tax revenues sometimes stimulate public finances. Finance Minister Rishi Sunak said some taxes will have to go up in the medium term. “Today’s figures are a transparent reminder that we want to repair our public finances in a sustainable way. ($1 – 0.7555 lbs) (This story corrects paragraph 16 to show the most recent OBR loan estimate of 322 billion pounds, not 298 billion pounds) ( Report through David Milliken; Edited through Alistair Smout, Kate Holton and Christina Fincher)
Economists are involved in the overall recovery in the retail industry being temporary.
“July retail sales are likely to peak this year,” said Samuel Tombs of consultancy Pantheon Macroeconomics.
Restaurants and bars began reopening in July, giving others more functions for their expenses.
In addition, unemployment is expected to rise dramatically once a government employment program is hald by the end of October.
According to government budget forecasters, emergency public spending and a deficit in tax revenues are expected to increase borrowing this year to a record 322 billion pounds.
Friday’s figures show that loans between April and July reached 150.5 billion pounds, almost seven times more than at the same time in 2019.
Debt in July was the lowest since the start of the pandemic with 26.7 billion pounds. July is a month in which tax revenue stimulates public finances.
Finance Minister Rishi Sunak has indicated that some taxes should be accumulated in the medium term.
“Today’s figures are a stark reminder that we want to put our public finances back on a sustainable basis over time, which will require difficult decisions,” he said.
($1 – 0.7555 lbs)
(This story corrects paragraph 16 to show the most recent OBR loan estimate of 322 billion pounds, 298 billion pounds)
(Reporting through David Milliken; Editing through Alistair Smout, Kate Holton and Christina Fincher)