U.K. retail sales rose in January, U.K. risks further economic shocks

Source: Dukascopy Bank SA
"In the last year we've started to grow again, but it's all down to consumer expenditure and real estate again. In the UK we haven't got the answers to rebalance the economy." 
- Lord Turner 

Retail sales in the U.K. rebounded in January after weak December to post their strongest annual gain since April 2011, partially boosted by a recovery in the country's property market. The British Retail Consortium reported that the total amount spent in stores last month was 5.4% higher than a year earlier, compared to 1.8% growth in December. The data point to the strong consumer demand, which spurred British economic growth last year, despite the fact that consumer price inflation is increasing faster than wages. 

While analysts all over the world welcome the rapid economic growth in the U.K., Lord Turner has warned that the country has failed to rebalance its economy and is repeating the mistakes made in the run-up to the financial crisis. The ex-chairman of the City regulator until last April compared the domestic economy over the last five years to the stagnation of the Japanese economy in the 1990s. He said that though the economy is showing signs of robust growth, it is likely that it will not be sustained due to continued build-up of credit in the system. He also cautioned that the already-agreed reforms to financial regulation are inadequate to prevent a future repeat of a 2007-2008 style crisis. 

© Dukascopy Bank SA

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