U.K. Retail Sales Weaker Than Expected Between Covid Lockdowns

(Bloomberg) -- U.K. retail sales rose less than expected in December, adding to evidence that a succession of Covid-19 lockdowns is dragging down the economy.

Sales in shops and online increased 0.3% after declining in November, the Office for National Statistics said Friday. That’s a percentage point less than economists had expected.

The figures undercut the Bank of England’s assertion that the economy is adapting to the pandemic and may be hit less severely by a third round of restrictions in place since the start of this month. A separate index showed consumer confidence is sagging. Central bank Chief Economist Andrew Haldane expects a sharp rebound by the middle of this year as vaccines against the virus take hold.

After a brief respite in early December, Prime Minister Boris Johnson tightened the rules again in the middle the month and then imposed a national lockdown in January, with no end in sight. That rounded off a tumultuous 2020 that devastated traditional retailers like Arcadia Group Ltd. but lifted those trading online like Amazon.com Inc.

Other data this week have painted a bleak picture of consumer spending, a crucial driver of U.K. growth. The latest lockdown increases the chance of another sharp downturn this year after the worst recession in three centuries.

Consumer confidence declined this month as Britons became more pessimistic about their own financial outlook, according to a survey by GfK. Yesterday, the ONS said purchases made by credit and debit cards fell 35% below pre-pandemic levels in the second week of January. Footfall in stores last week was one-third of where it was a year ago.