Problems in Greece, Weakness of the Euro, Retailer Benefits

Another successful Greek rescue package has been announced today, with the German government looking like they will back this proposal.  I'm sure many will not accept that this rescue package will become a reality until the money starts following.  The eurozone has so far supported the theory that currency union without political union is very hard to sustain.

I will be watching the foreign exchange markets closely over the next few days to see whether they are convinced that the proposals will become and reality and whether they can really work...or are just postponing the inevitable, a Greek debt default.

One benefit of the problems in Greece are that retailers should start to see the benefits of a stronger pound.  In the past six months the pound has strengthened by around 8% against the euro.Retailers have been struggling throughout the downturn for a number of reasons, and one of these was the weakness of the pound pushing up the price of imports.  This has hit retailer margins as they were forced to keep prices low in order to continue to attract customers.

It should be said that some retailers have been loving the weakness of the pound, particularly those in Central London who have been enjoying roaring trade as tourists from Europe and around the world came to the capital looking for cheap goods.

In addition those companies (generally not retailers) that have benefited from exporting goods will not be thanking the rise in the pound.

Nevertheless, the pound remains weak compared to historic standards and further strengthening over the next few years should be expected.  In the short term the problems in Greece and other eurozone countries will continue to have an impact on the relative value against the euro, whilst the outcome of the General Election and if there is a hung parliament will almost certainly weaken the pound as markets fear indecision and a lack of action of the deficit.

Always adding new centre - your suggestions

You will notice that we are constantly adding new retail locations to The Retail Database. Eventually we hope to be able to open up the database for everyone to contribute.

Until this time please feel free to suggest any shopping centres, retail parks or high streets that you would like to see on the website. We have recently added Fareham Shopping Centre onto the database because it was suggested by one of our Twitter followers.

We look forward to hearing from you.

London 2012 Olympic Games, shopping and retail opportunities

It may seem like a long way away but the London Olympics Games will be with us in just over two years and it is time to start thinking about the best ways to take advantage of the many retail opportunities associated with the Olympics Games.

We will be providing regular comments over the next two years, giving advice and suggestions for retailers, independent traders and visitors looking to get the best retail experience from the Olympics in London.

The Olympic retail experience will not just be the massive Westfield development located at the heart of the Olympic complex, although it will play a big part and it certainly worth having a look at the scheme which is set to open in 2011.

http://uk.westfield.com/stratfordcity/vision/olympic-context/

Visitors will be located across London and the wider South East. Tourism throughout the UK will be boosted as people from across the globe take the opportunity to see the country, its culture and its history. Everyone should be making the most of this opportunity.

One place you will certainly be hearing more about in the run up to the Olympics will be Much Wenlock in Shropshire. Some claim this to be the birthplace of the modern Olympics.

Election debate - what wasn't said!

The final election debate was supposed to focus upon the economy, but frankly the lack of detail from all three candidates was astonishing.  We learnt very little new about their policies and I'm not sure anyone really believes that cuts won't be larger than we are being told, whoever gets into government.

This was a great opportunity to debate the merits of a Brown type Keynesian policy of continuing government spending verses the Conservative classical economics position of cutting the deficit, shrinking government and balancing the books.  Both positions have merit and should have been examined.  They were hinted at but no great detail was given.

It is easy to understand why politicians avoid announcing these tough and technical positions to the public.  George Osbourne went down the path of announcing austerity and the polls moved sharply against him.  It seems perhaps we are happier to be misled than to hear the truth.

Make no mistake, whoever gets elected next Thursday, spending will be cut sharply and taxes will rise.  Even with the economy coming out of recession, things may to many feel a lot worse.

UK GDP Q1 2010 likely to be revised up

Last Friday saw the release of the preliminary estimate of the UK Q1 2010 GDP figure.  The economy was shown to have grown by 0.2% in the first three months of the year, compared to 0.4% in the final quarter of 2009.  This was less than the 0.5% that analysts had expected.  These forecasts always confuse me a little...are analysts forecasting what they think GDP grew by in the quarter or what the preliminary estimates will show...a distinctly different calculation.

The preliminary reading is based upon 40% of the data needed to make a complete reading, compared to 60% at the second reading and 80% at the final reading.  With more data available for the earlier part of the quarter, the preliminary readings are skewed towards what went on in the first two months.

http://www.statistics.gov.uk/cci/nugget.asp?id=192

Given the terrible weather conditions in the first part of the quarter, which shut down factories, kept people away from work and resulted in a sharp fall in retail sales, it is more surprising that the preliminary estimates are not worse. 

Nevertheless, other indicators suggest that the economy strengthened throughout the quarter, recovering output and sales from the bad weather period.  Therefore, like the previous few preliminary GDP estimates, it is again highly likely that future readings will be revised higher.  The 0.5% growth in GDP that analysts were expecting may well become a reality or possibly even prove too pessimistic!

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Do not be fooled by unemployment figures

The unemployment figures released yesterday provided mixed headlines this morning.  Some of the press focused upon the fall in unemployment and 30,000 fewer people claiming unemployment benefit.  These are good figures that provide some signs that the recession and the downturn are fading.  However as always the devil is in the detail.

What the headlines don't tend to indicate is that although unemployment fell, so did the number of people in employment.  Therefore the number of people working, earning and producing goods and services in the economy actually declined.

The two paragraphs above may seem inconsistent.  They are not.  The main reason that both unemployment and employment fell is that the total number of people in the labour market has been falling as the inactivity rate increased by 150,000 in the quarter and the number of overseas workers decline 100,000 in the year.  The rise in the inacitivy rate was driven by a 100,000 increase in the number of people registered as students.  Although this is preferable to redundancy, the majority of these students are not attending university or enrolling in rigorous higher education courses, many of these courses have been set up in the past year in the face of recession and are well known to provide little in the way of actual benefit to either the individual or wider society.  A cynical person might even argue that these courses are a very useful political tool to keep down the official unemployment figures. 

Finally the labour market stats also continue to show that it is the public sector that is creating the additional jobs, not the private sector.  Given the necessity for the government to cut its deficit, this is a temporary solution, and likely to be reversed.  Without a return of private sector jobs growth there will be no recovery in the labour market.

Its not all doom and gloom out there anymore and things are slowly getting better, but as ever it is easy to get carried away when misinterpreting monthly data!

http://www.statistics.gov.uk/cci/nugget.asp?id=12