Retails Sales Growth In The UK Has Stalled
News that like for like retail sales growth in July fell by 0.9% was something which was not totally unexpected by the market. This latest fall is the fourth in the last five months and is a trend which is set to continue for the foreseeable future.
It is not just the affect of falling sales which is hitting the high street but also the increase in underlying costs. This double whammy has seen margins slashed and a number of companies on the verge of calling in professional help to assist with the problems. Insolvency practices and administrators are set to have a very busy period over the next 12 months and beyond trying to sort out a number of highly leveraged balance sheets.
In theory the pressure on profit margins could turn in a short space of time but with inflation pushing costs higher and the consumer unable take on these extra costs, businesses are being forced into taking larger and larger financial hits. The government is not in a position to assist due to the massive deficit on the public account and the Bank of England has nowhere to move with regard to interest rates.
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