Cuts could lengthen retail recovery warns Deloitte

BUSINESS advisory firm Deloitte has warned that Government cuts could lengthen the recovery of the retail sector in the North west.

The warning comes despite yesterday’s ONS figures showing that British retail sales rose by 1.1% in July – the strongest gain since February.

Sharon Fraser, retail expert and head of audit for the regions at Deloitte, said that the North West retail recovery will remain protracted as measures taken to tackle the deficit continue to impact on consumer spending.

She said:  “The figures for the UK show an increase in retail sales for July, but with weak comparatives from July last year, the underlying weakness of demand in the national and North West retail economy may be being masked. 

“The reality remains that this is a weak market, and has every chance of getting worse before it gets better.

“The impact of tax and national insurance increases are still feeding through to people’s pockets, the housing recovery looks far from secure and concerns remain about job security, particularly in the public sector. 

“At the same time, individuals are showing a greater desire to pay down personal debt, or save a higher proportion of their income.”

She said it would be ‘inconceivable’ that measures being taken to tackle the national debt will not hit consumers in the North West. 

“The most obvious example of this is through the increase in VAT, although the saving grace is that the increase does not come into force until January. 

“Christmas 2010 would have been significantly worse for retailers had the increase come into force immediately,” she added.