IEA economist responds to ONS data on retail sales and public sector finances

Commenting on the latest data published today by the ONS, Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, said:

“The latest UK retail sales data provide more evidence that the economic recovery has regained momentum after the dip in the summer. Headline sales rose 0.8 per cent in October, with non-fuel sales surging 1.6 per cent. The September data were revised higher too.

“The Gfk measure of consumer confidence also unexpectedly improved in November, helped by a 7-point jump in the willingness to make major purchases. The strong jobs market appears to be offsetting fears about inflation. Families also seem determined to have a better Christmas this year than last.

“Nonetheless, it is too soon to sound the ‘all clear’. Inflation still has further to rise, and taxes are also going up next year. There is a danger that this is a ‘last hurrah’ before consumers tighten their belts again in 2022.

“The government therefore needs to focus on supporting the economic recovery – which remains the best way to repair the public finances – rather than adding even more to the tax burden.”

“The importance of boosting growth was illustrated by the latest data on the public finances. The ratio of debt to GDP is already falling as the economy recovers: the headline measure was 95.1 per cent in October, but 95.5 per cent in September, 99.7 per cent in June, and over 100 per cent in several months in 2020.

“The Bank of England also needs to ensure that a temporary increase in inflation does not become permanent. A small rate increase in December would not derail the recovery, but would show the Bank is serious about keeping inflation down over the medium term.”


Notes to editors

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