Retail woe
Luxury lapses
An unseasonably warm September coupled with wider wariness over the strength of economic recovery at home and abroad has heaped further pressure on the retail sector. The latest British Retail Consortium figures showed that retail sales fell by 0.8 per cent, or 2.1 per cent on like-for-like terms, and prices slumped by 1.8 per cent in September, driven by food and clothing price weakness in particular. This has already been reflected in weak figures from supermarkets, as well as high-street operators such as Next, but the malaise has also spread to luxury goods, with posh bag maker Mulberry issuing a poor trading update this week and Burberry warning on signs of weakness in certain international markets.
Inequality widens
1 per cent winning
The fabled '1 per cent' are hoarding even more of the world's wealth. The distribution of the world's wealth has become further polarised, increasing the chances of another recession. The latest Credit Suisse global wealth report said that global wealth has risen by $20.1 trillion over the past year, but the lion's share continues to gravitate to the top, with the richest 1 per cent of the world's population accounting for 48 per cent of its wealth and the top 10 per cent holding 87 per cent. This leaves half of the world's population holding just 1 per cent of its wealth in aggregate. With wealth accumulation outpacing wage growth, the report's authors point out that "abnormally high wealth-income ratios have always signalled recession in the past".
Inflation slumps
New low
The prospect of interest rate rises disappeared over the horizon into 2015 this week. The headline rate of inflation in the UK has followed the lead of the eurozone by dipping to a level unseen for a decade, apart from one monthly aberration in 2009, as it slipped to 1.2 per cent for the year to September. Key contributors to its weakness were transport costs and the falling price of oil, coupled with the weak retail environment which has encouraged a high street and supermarket price war. Analysts had been expecting a fall to 1.5 per cent, but the scale of the undershoot means interest rate rises this side of Christmas, or even before next May's general election, are increasingly unlikely.
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Tesco trouble
Three more suspended
The investigation into alleged misrepresentation of profits at beleaguered grocer Tesco continues to claim senior scalps. Another three top managers have been relieved of their duties as the probe into a £250m profit shortfall continues ahead of Tesco's delayed interim results publication on 23 October. The heads of impulse buying, wines & spirits and convenience have stood down, taking the total number of senior managers temporarily removed from duties to eight.
IPO confidence listing
Bank pulls float
The knock to investor confidence from the 7 per cent slump in London's All-Share index in the past few weeks has started to tar the new issues market. Hot on the heels of news that posh shoe maker Jimmy Choo had narrowed its price range downwards earlier this week, 'challenger bank' Aldermore pulled its float at pretty much the last minute. It announced its decision to scrap its IPO on Wednesday, just two days before its shares were expected to be priced and begin condition trading in London. Aldermore, which is backed by private equity group AnaCap and institutions such as Morgan Stanley, had been hoping for an £800m valuation.
Jobs boost
UK low
The unemployment rate in the UK has fallen to its lowest level since 2008 this week, at 1.97m. The figure for the three months to August equated to an unemployment rate of 6 per cent, below analyst expectations of 6.1 per cent. But some pointed to other figures suggesting that the fall in jobless numbers masks weaker employment trends: just 46,000 jobs were created between June and August; 113,000 people became economically 'inactive'; and the fall in the number claiming jobseekers allowance fell by less than expected.
