UK retail sales fall more than forecast; budget target missed

Bloomberg

U.K. retail sales posted their biggest monthly decline in more than two years in March as Britons bought less of everything from food to
clothing.
The volume of sales excluding auto fuel fell 1.6 percent from February, the most since January 2014. Total sales dropped 1.3 percent.
Both far exceeded the modest declines forecast in a Bloomberg survey.
The Office for National Statistics, which published the data on Thursday, also revealed that public-sector borrowing overshot official forecasts in the latest fiscal year, and debt as a share of the economy rose.
A £4.8 billion budget deficit in March — less than the £6 billion forecast by economists — left the full-year shortfall at £74 billion, or 3.9 percent of gross domestic product. That compares with the £ 72.2 billion projected by the Office for Budget Responsibility last month.
Retail sales gained 0.8 percent in the first quarter, suggesting the sector — which accounts for 5.7 percent of GDP — made little contribution to growth during the period. Consumers buoyed by record employment and low inflation have been the engine of the U.K. expansion as global woes take their toll on manufacturing and exports.

Growth Slowdown
The figures provide “yet more evidence of a slowdown in the U.K.’s economic recovery,” said Vicky Redwood, an economist at Capital Economics Ltd. in London.
It also indicates that first-quarter economic growth weakened from the 0.6 percent seen in the last three months of 2015, she said.
The monthly decline in retail sales was the second in succession. Food sales fell 1.9 percent, the most since January 2014. Non-food sales dropped 1.5 percent as clothing and footwear, household goods and department stores all saw declines.
Sales of auto fuel climbed 0.5 percent.
Overall retail sales rose 3.7 percent in the first quarter from a year earlier. Measured by the deflator, prices at stores — including petrol stations — fell an annual 3 percent in March.
Debt Sales
The public finances data showed the deficit in March was the smallest for the month since 2006. Central government receipts rose 5.4 percent and spending climbed just 0.8 percent. Net investment declined. In the fiscal year, spending rose just 0.3 percent, the least on record.
The cash measure used to calculate how much the Treasury needs to borrow in the financial markets came in at £78.4 billion in 2015-16, instead of the £75.5 billion predicted by the OBR last month.
The Debt Management Office announced shortly after the figures were released that it’s increasing planned bond issuance to £131.5 billion in 2016-17 from £129.4 billion.
The figures confirmed that Chancellor of the Exchequer George Osborne has already failed on one of his fiscal targets. Instead of falling as promised, net debt as a share of GDP rose to 83.5 percent in 2015-16 from 83.3 percent a year earlier.
That leaves him under pressure to deliver on his central ambition to return the public finances to surplus by the end of the decade.
Net borrowing in the latest fiscal year fell from £91.7 billion, or 5 percent of GDP, in 2014-15.