Slowing retail sales are the topic of two of this morning's papers with the Scotsman reporting an unexpected fall in sales in March, sparking speculation the feared consumer slowdown may now be taking hold.
The pound fell and interest rate futures surged on the 0.1% decline in sales as dealers scaled back expectations that the Bank of England will move soon to raise rates says the paper.
Although the Scottish retail sector remains robust, the Office for National Statistics said that, for the UK as a whole, sales fell, confounding expectations for a rise of 0.4%. The dip pushed down the annual rate of increase to 2.7%, its weakest performance since August 2003.
Earlier this week the ONS reported British inflation rose to its highest in nearly seven years and just below the Bank’s 2% target. The paper says this has re-ignited concerns rates were set to climb, perhaps as soon as next month.
THE Guardian also says the chances of an interest rate rise next month have lessened as a result of the fall in retail sales.
It reports claims that a new Labour government would need to raise taxes or cut spending by £11bn in the next parliament to restore the public finances to a healthy state.
It says that although the Institute for Fiscal Studies has merely repeated its earlier warning to the Chancellor, the intervention has come at a sensitive moment in an election campaign so far dominated by tax and spending.
Labour apparently reacted furiously to the report, insisting the IFS was being far too pessimistic in its analysis and that Gordon Brown's forecasting record was better than the international groups - the Organisation for Economic Cooperation and Development and the International Monetary Fund - who share the IFS view.MEANWHILE The Times says new laws to protect company pension funds could allow trustees with little business experience to influence board decisions on acquisitions, dividend payments and debt restructuring.
The Pensions Act, which came into force on April 6, has had an “unintended consequence”, compromising the authority of company boards, it claims.
The Times reports Richard Lapthorne, chairman of Cable & Wireless, the telecoms group, as saying: “Rules that were designed to protect pensions could restrict corporate decision-making, which was not the intention.” Lapthorne says displays of muscle-flexing by pension trustees — similar to last July’s move by WH Smith trustees to scupper a private equity bid for the retailer —could become more common.
Under the Act, companies with pension fund deficits must consult the new Pensions Regulator before paying unusual dividends, taking on or refinancing debt, or changing the corporate structure. The rules are designed to stop bosses from siphoning money away from pension funds.
FINALLY the Financial Times says simmering tensions between British companies and their shareholders have burst into the open after the chairman of Cadbury Schweppes launched a broad attack on the investment community.
John Sunderland, also president of the CBI, in a speech yesterday is reported to have accused banks, institutional shareholders and hedge funds of lacking the openness they demanded of listed companies.IFAonline
Cautious, Balanced & Dynamic Growth
Cowardly, boring or sensible
Latest news and analysis
‘Most significant’ upgrade since launch
Changes happening over coming months