Sales of new clothing have rebounded in the UK, following the adverse weather conditions that dampened April sales. The Office for National Statistics reported that May witnessed a 6% increase compared to the same month in 2015, representing a significant 4.3% rise on a month-to-month basis, marking the most substantial increase in over two years. This surge exceeded analysts’ expectations, who had previously predicted only a meager 0.2% rise. These forecasts were based on the backdrop of lackluster sales from February through April.
Economist Alan Clarke of Scotiabank suggested that this positive development may bode well for the GDP growth in the second quarter of 2016. Additionally, separate figures from the British Retail Consortium indicated a 1.4% rise in May retail sales compared to April, driven by the growing demand for summer clothing.
However, it’s not entirely a rosy picture. Chancellor of the Exchequer George Osborne warned that if the UK were to vote for ‘Brexit,’ it could necessitate raising taxes and reducing public spending due to a potential £30 billion deficit in public finances. Some analysts also caution that this growth might be short-lived and could slow down as the depreciation of the pound continues. As the costs of purchasing and production rise for retailers, this could result in more expensive goods for consumers, ultimately leading to a marked slowdown in retail sales volumes in the second half of the year, regardless of the referendum outcome.
