UK Credit

UK businesses report strong trade after lockdown reopens

Many UK businesses last week reported better-than-expected trade as they reopened after a three-month lockdown, with unofficial measures of economic activity suggesting strong pent-up consumer demand.

Economists said preliminary data showed the reopening was “also taking place [as] we could have hoped, ”confirming their forecasts of a strong rebound in the second quarter.

Consumers’ incomes were largely protected by the government’s holiday program during the fall in production in 2020, and tracking data from store visits, restaurant reservations and banking transactions showed households were eager to spend when shops, bars, pubs, outdoor entertainment and many other businesses reopened on April 12.

In the first three days after reopening, visits to retail and entertainment venues climbed to less than 24% of January 2020 average levels, down from 50% below the previous week, according to the Google mobility data, indicating a sharper recovery. until after the first locking.

A similar picture for the retail sector was presented by statistics from consulting firm Springboard, which showed footfall last week to all UK retail destinations was 25% below that of the same week of 2019. The company noted that the attendance gap from 2019 has narrowed. by more than half in a single week, reaching the level reached after two months of trading after the first lockdown.

The recovery was driven by retail fleets, down just 2% from 2019 levels, while department store footfall was still down 35%.

Column chart for April 11-17,% change from same week in 2019, showing retail parks driving UK footfall recovery

Diane Wehrle, director of insights at Springboard, said the first week of reopening delivered “an exceptional performance” for the UK retail industry. She predicted that footfall would increase over the next few weeks and that the reopening of the indoor hotel business on May 17 would give “a new boost” to retail destinations, as many streets and malls have venues in it. interior.

Delia Prudence, owner of The Art Room, an art supply store in Scarborough in North Yorkshire, said she expected to be busy with the reopening “but not so busy”.

“After a year of what can only be described as retail hell, we feel a lot more optimistic and confident about the future,” she said.

In the first three days after the reopening, consumer spending rose 10% from the same days of the week in 2019, down from nearly minus 30% in the week ending April 11, according to Fable Data, a business that tracks credit card transactions.

Line graph of bank and card transactions,% from equivalent week in 2019, showing UK consumer spending increased after April 12

In the same three days, retail spending rose 43% above the same period level in 2019, Fable Data showed.

Kirsty McDonough, manager of The Crown, a Waltham Abbey pub in Essex, said that although no customers could be served inside, “we were much busier than we thought”. Despite the cold, “the atmosphere has been fantastic and people seem delighted to be able to eat and drink again.”

Fable Data figures also showed spending at pubs and restaurants, which could only serve people outside, fell 42% below their 2019 levels, up from declines in 70-90% recorded throughout the last lockdown. This is similar to the rise in restaurant reservations followed by Open Table.

Line graph of 7-day moving average,% change from same day of the week in 2019, showing UK sit-down restaurant bookings have increased since reopening

Busier stores and other businesses meant more people were on the move, as government figures on public transportation and car use show. With the reopening, vacancies returned to their pre-pandemic level in April.

High-frequency indicators, such as the mobility of people or restaurant reservations, are increasingly monitored by economists and policymakers because they provide a more timely, albeit less comprehensive, measure of activity than official economic data.

Line graph of government response stringency index, 100 = strictest showing UK now has less stringent Covid-19 measures than other European countries

Samuel Tombs, UK chief economist at Pantheon Macroeconomics, said near real-time indicators suggested that the reopening of stores and some consumer service businesses last week “is going as well as it could have been. hope so ”.

Ruth Gregory, senior UK economist at consultancy Capital Economics, said consumers were “in a position to propel the recovery as the first signs are that households are ready to return to pubs and restaurants”. She predicted that the phased reopening of the economy would reduce gross domestic product to about 2 to 3 percent below its pre-pandemic level by July, from a gap of around 8 percent in February.

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