BCC comments on public sector finances and retail sales figures

21st July 2016

Commenting on the public sector finance figures for June 2016, published today by the ONS, Suren Thiru, Head of Economics at the BCC, said: -While the decline in borrowing for the second successive month is encouraging, progress in cutting the deficit remains painfully slow.

-Weaker than expected growth since 2010 has meant that the UK economy has consistently struggled to generate the tax receipts needed to achieve real progress in reducing the deficit. -The decision to abandon the budget surplus target was undoubtedly a sensible one following the EU referendum result, but the government must use the greater fiscal flexibility to aggressively pursue measures to support growth, including creating greater incentives for business investment and improving our infrastructure. Commenting on the retail sales figures for June 2016, published today by the ONS, Suren Thiru said: -Although the fall in retail sales in June was disappointing, this was partly driven by the unseasonable weather in June, and the quarter as a whole was still a reasonably strong one for the sector. -An important driver of retail sales growth has been the continued fall in average store prices. The upward pressure on prices from the recent fall in sterling could force a slowdown in retail sales growth in the coming months by squeezing consumer spending, a vital component of economic growth.