The UK has been welcomed into the bright and shiny New Year of 2010 with the worst high street January sales record since records started 15 years ago.
There was a 0.7% drop in sales compared to January 2009, which comes as a shock to the general economists’ consensus that there would be a 0.5% increase.
The snow may well of course had an adverse affect as people stayed indoors and only ventured out for the essentials. The VAT increase would have brought some January purchases forward into December 2009 so boosting that month’s figures at the expense of January.
But the New Year brings with it an expectation that unemployment may well get worse, in fact even if technically it doesn’t, it is almost a certainty that ‘underemployment’ will rise throughout the year. Underemployment is where highly skilled workers are forced into low skilled jobs, people are involuntarily made into part-time workers and where overstaffing (hidden unemployment) occurs. For the latter take a look at the public sector.
There is also the Eurozone that is teetering drunkenly along the edge of an abyss. Not to mention the UK’s own problems with debt and the strains being placed on sovereign debt.
The Bank of England has ended the quantitative easing programme, but one wonders whether any more would help anyway.
Wage freezes are now the order of the day, with the Labour Research Department (LRD) saying they account for a third of all new wage deals. They report fewer orders, fewer long term pay deals, more pension deficits, greater stringency in performance related issues and fear of more job losses and cut-backs.
The UK’s largest companies also cut dividend payouts by about Â£10 billion having been hit not only by falling profits but also by the difficulty in re-financing on good terms.
Earlier in the month it also emerged that insolvencies are running at about 10,000 per month, which is the highest on record.
A few months ago eyes were fixed on the recovering markets and bank profits. They are always, it was stated, the precursor to an upturn, just look historically at the data. But never before has there been such a concerted effort by government to prop the edifice up. But all this has done is delay the inevitable. A second dip to the recession looks to be on the cards.
While the commissions flow at the top, the P45s, wage freezes and bankruptcy petitions flow at the bottom.