Retail sales and public finance data - PwC chief economist comments
Published at 11:32 AM on 21 August 2014
In response to retail sales and public finance data released today, John Hawksworth, PwC’s chief economist, said:
"Retail sales volumes continued to grow in July, but there are some signs that growth is moderating. The rate of increase in the year to June was down to 2.6%, which is the lowest year-on-year retail sales growth rate since last November. But retail sales data can be erratic, so we should wait for more evidence before concluding that the recovery is running out of steam.
“The latest public finance figures showed that the cumulative budget deficit in the first four months of the financial year, excluding special factors, has been slightly higher than the same period in 2013/14. It is early days yet in 2014/15, and these are only preliminary estimates, but the OBR forecast that the underlying budget deficit will be around £10 billion lower in 2014/15 than last year is looking quite challenging to achieve.
“One reason is that tax revenues are driven by nominal growth in the economy and, while real GDP growth has been relatively strong over the past year, inflation has been more subdued, particularly as regards wages. So a robust economic recovery over the past year has not pushed down the budget deficit as much as might have been expected."
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