To quote Bill Clinton, “It’s the economy, stupid…”. There has been much speculation about Theresa May’s motivation for calling a general election three years early, when she has an absolute majority of 12 in the Commons and when her Brexit legislation (so far) has gone through parliament unscathed. Opinions vary with some claiming that she could not resist polls showing a 20 point lead over the opposition Labour Party; a desire (denied) to gain her own mandate; her claim to want a strengthened mandate to improve her negotiating position with the EU (utter nonsense as it can’t improve the position of a sovereign state one iota – see Greece!); or a desire to cut and run before the economic storm clouds gather and the folly that is Brexit is plain to even the most intellectually challenged Leave supporter. Well…
Data from the Office for National Statistics shows that retail sales in the UK fell by 1.4% in Q1 over the Q4 2016 level and slipped by 1.8% in March over the February 2017 figure. The quarterly decline is very significant, marking the worst fall seen since 2010. Rising prices are blamed for the decline as the price of imported goods and raw materials pick up following the fall of Sterling since the referendum. The ONS said that “average” store prices were 3.3% higher than a year earlier, the largest increase since 2012. A significant factor is the rise in fuel prices (crude oil is priced in Dollars) which saw a 16.4% rise in the year to March.
"This is the first time we've seen a quarterly decline since 2013, and it seems to be a consequence of price increases across a whole range of sectors", said Kate Davies a senior statistician with the ONS. A similar point was made by Keith Richardson, a managing director of retail at Lloyds Bank Commercial Banking: "These figures suggest that the clouds are now gathering over British consumers. Rising food and petrol prices, together with slowing real wage rises, appear to be finally prompting shoppers to tighten their belts, while the value of the pound continues to put pressure on retailers' costs."
Surveys have suggested that support for Brexit would evaporate if it meant that families were more than £1200 a year worse off, but the question is will worsening economic data appear quickly enough to sap Conservative support at the general election which takes place on 8th June?