Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

UK shoppers start to spend again, but public borrowing hits record

EconomyJun 19, 2020 04:58AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
3/3 © Reuters. FILE PHOTO: Shoppers carry bags from a department store in Oxford Street, in London 2/3

By David Milliken and William Schomberg

LONDON (Reuters) - British shoppers bought much more than expected in May as the country gradually relaxed its coronavirus lockdown and online retailers boomed, adding to signs that the economy is moving away from its historic crash in March and April.

But official data also showed public borrowing hit a record high as the government opened the spending taps and public debt passed 100% of economic output.

Sales volumes in May jumped by a record 12.0% after an unprecedented 18.0% slump in April.

The rise was at the top end of economists' forecasts in a Reuters poll but still left sales 13.1% down on a year ago.

Most shops in England remained closed until June 15, suggesting a further increase is likely this month.

Consumer confidence in June was the strongest since the lockdown began but remained weak, a separate survey showed.

Bank of England Governor Andrew Bailey said on Thursday the economy appeared to be shrinking a bit less severely in the first half of 2020 than the BoE had feared. But there was no guarantee of a strong rebound and unemployment would rise.

"May's recovery in retail sales should not be interpreted as a sign that the economy is embarking on a healthy V-shaped recovery from COVID-19," Samuel Tombs, an economist at Pantheon Macroeconomics, said.

Household incomes would take a hit when a government support scheme covering 9 million jobs is wound up in October, he said.

Britain closed non-essential retailers in late March and only a small number such as garden centres reopened in May.

Sales at non-food stores increased by 24% in May, but were still 42% down on a year earlier, with clothes stores the hardest-hit category, down by more than 60%. Fuel sales jumped by 49% as people in England got back in their cars.

Online sales rose to a third of all spending, a new record.


The ONS data also laid bare the scale of the hit to Britain's public finances.

Public sector net borrowing hit 55.2 billion pounds ($68.7 billion) in May - nine times the level for May 2019 and a record high after April's reading was revised down sharply.

"The best way to restore our public finances to a more sustainable footing is to safely reopen our economy so people can return to work," finance minister Rishi Sunak said.

The Institute for Fiscal Studies and Citi said Britain would still be borrowing heavily in five years' time.

Government borrowing is effectively being underwritten by the BoE which topped its bond-buying programme by 100 billion pounds on Thursday.

A measure of public sector debt increased to 1.95 trillion pounds, topping 100% of economic output for the first time since 1963, when Britain was still paying off Second World War debts.

That measure reflected the record 20% contraction of the economy in April as well as the borrowing surge.

In April and May, borrowing of 103.7 billion pounds was a towering 87 billion pounds higher than a year earlier but below the 122 billion pounds government forecasters have predicted.

"Encouragingly, the government isn't struggling to finance this extra borrowing, while the cost of servicing this debt is still on course to fall," said Charlie McCurdy, a researcher at the Resolution Foundation think tank.

UK shoppers start to spend again, but public borrowing hits record

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email