UK economy: Bumper Christmas sales and housing and construction growth lift gloom

Hugo Duncan

Last updated at 11:35 PM on 4th January 2012

The gloom hanging over the economy eased yesterday as upbeat retail and financial news boosted hopes of a recovery.

High Street giants Next and John Lewis celebrated bumper Christmas sales and there were much-needed signs of life in the housing market and construction industry.

Government borrowing costs also tumbled to a record low as British firms made their biggest profits since before the banking crash three years ago.

Christmas bonus: High street chain Next reported bumper festive sales, buoying the economic outlook

Christmas bonus: High street chain Next reported bumper festive sales, buoying the economic outlook

The better-than-expected results improved Britain’s chances of avoiding a double-dip recession despite looming  disaster in the eurozone and the painful squeeze on household finances.

Ross Walker, an economist at Royal Bank of Scotland, said households were ‘still up to their eyeballs in debt’ and were unlikely to contribute to the recovery.

As the Treasury insisted there were bright spots in the economy despite  ‘difficult times’, it emerged that:

  • Despite a 2.7 per cent fall in store sales, Next reported a 3.1 per cent rise in overall sales including online trading from August 1 to December 24, compared with 2010.
  • John Lewis sales in the five weeks to Christmas Eve were £596million, up by 9.3 per cent.
  • 52,854 mortgages were approved in November, the most since 2009.
  • Firms excluding financial institutions were at their most profitable in the third quarter of 2011 since the same period in 2008.
  • The Markit/CIPS index for the construction sector –  with figures over 50 showing growth – rose to 53.2 in December from 52.3 in November, a 12th consecutive rise.
  • Nissan produced 480,485 vehicles at its Sunderland plant in 2011, up 14 per cent from 2010 and a record for a British car plant.
  • The Government sold £3.75billion of five-year bonds – debt to be repaid in 2017, at an average interest of 1.1 per cent, a record low.

David Miller, a partner at Cheviot Asset Management, said borrowing costs were low because as the single currency debt crisis raged, Britain had become ‘a beacon of sanity in Europe’.

John Lewis

The figures came after a survey on Tuesday showed British factories had a surge in orders from Germany, Eastern Europe and China in December.

Philip Shaw, chief UK economist at the investment bank Investec, said: ‘While things are undoubtedly very challenging there are grounds for optimism. Inflation should be much lower this year, removing what was a major kick in the teeth to households in 2011.’

A Treasury spokesman said: ‘These are difficult times. But these results demonstrate the importance of not overlooking the strengths in our economy.’


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rubbish , total lies , wait and see , most high street brands will close they will take any money they earned at xmas and run


“At last, the economy shows signs of life: Bumper Christmas sales and growth in housing and construction lift gloom” BUT, it is all based ‘on tick’ again and the bulk of the spending has gone on plastic cards meaning that personal debt in UK is even higher and has to be paid off sometime.

What absolute nonsense. This reporter will be saying tomorrow that he has heard the first cookoo of spring. In his head maybe.

Someone has been pulling too many Christmas crackers and reading the fortune cookies again. Others,less indulgent, will be singing another song next month. I have yet to see by how much the UK national credit card debt soared over the Christmas period.

Heard it all before. Give it a month and then see if the economy is still booming.

Have you been In supermarkets this week, they’re dead. People have had a little cheer-up for themselves but now they’ve battened down tighter than a drum. The high street can burn for all we care.

So because Next and John Lewis have reported bumper sales over the Christmas period, everything is now going to be Ok? Wow that’s a bit of a relief to know, I never realised that the state of the UK economy was based on the turn over of these two shops!
Having said that, I personally did purchase a £1300 mattress in December from John Lewis, wanted to buy British merchandice etc and I have to say it is fab, and would always highly recommend them. So I’m glad to have helped the UK in avoiding the double dip….Only time will tell though!

But yesterday it was all doom and gloom as the preChristmas sales had failed to jump start the economy as quoted by this very rag.
Now I’m really confused!

There are still plenty of people with savings, desparate to get a decent rate of interest. Instead of going to the IMF why doesn’t the government offer bonds paying inflation plus 1% or at least temporarily increase the ISA allowance.
Banks are paying 0.5% or less and charging 8% for mortgages,1600% profit no wonder they can afford huge bonuses.

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