It is too early to tell whether the slowdown in UK consumer credit growth in July was the result of waning confidence among the nation’s shoppers or the restraints placed on banks by the regulator.
Either way it spells trouble for an economy dependent on consumer spending to drive GDP growth. With business investment in the doldrums and exports unable to make much headway despite the low pound, the consumer is the linchpin preventing the economy stalling altogether.
Admittedly the consumers’ appetite for credit is still high and the annual growth rate only slowed to 9.8% from 10% in June. Yet it is increasingly clear that the post 2014 boom in jobs and growth was tied to a period of 10%-plus consumer credit growth and that era now appears to be over.
Adding to the gloom, a fall in consumer confidence predicted by the European commission’s monthly index for August confirmed the trend. Of several measures used to compile the data, the test of confidence in the state of the UK economy over the next 12 months was the worst. It slid to a four-year low, the commission said.
Brexit uncertainty is likely to play a big part in this. And while the reaction cannot be described as a panic, households are visibly pulling in their horns.
No wonder Lloyds bank’s business survey for August showed that overall business confidence fell 13 points to a one-year low of 17%. It’s clear that business leaders can also see a difficult year ahead.
Uncertain future for world’s wealthiest people?
There are different ways of looking at the world’s richest people and how they have fared since the 2008 crash. A glance at the Forbes rich list reveals that the usual suspects are amassing even greater piles of wealth than when Lehman Brothers hit the buffers.
Microsoft’s Bill Gates leads the pack again with a fortune of $86bn (£66bn) followed by investment guru Warren Buffett, Amazon boss Jeff Bezos and Zara owner Amancio Ortega.
Facebook’s Mark Zuckerberg, Mexican telecoms magnate Carlos Slim and Larry Ellison, who founded the Oracle database business, rank five, six and seven, the Koch brothers are eighth and ninth with $48.3bn each, and financial information provider Michael Bloomberg manages a respectable 10th place with $47.5bn.
From one angle they are obscenely rich, but from another viewpoint they at least created, or invested in, businesses that employ millions of people.
China’s second-richest person is a property magnate who has seen his wealth increase by $9bn in just the past seven days. Hui Ka Yan has become Asia’s second richest person (after Jack Ma, the founder of Alibaba, the Chinese version of Amazon ) on the back of a boom in prices. No effort required.
So far China’s property boom has added $43.8bn to the fortunes of the country’s property tycoons this year, a collective gain of 85%, according to Bloomberg. No wonder economists fear that without a clampdown on credit, a crash awaits.
Time for regulator to visit Asos as it closes in on M&S’s retail crown
For anyone who still spends time shopping on the high street for clothes, Marks & Spencer remains a strong reference point.
News that online, fast fashion operator Asos is poised to have a higher stock market value than M&S is seen by some in the City as a “seminal moment” that illustrates the passing of the old in favour of younger, more nimble rivals.
Certainly, given M&S’s problems with its fashions and persistent failure to restock popular lines and sizes, the retailer is an example of how difficult many 20th century businesses have found the transition to servicing niche tech-savvy audiences with fickle tastes.
But for much of Asos’s existence, the difference has been more stark in the relative employment practices. Where M&S paid a decent wage and offered one of the most generous non-final salary pension schemes, according to the Community union many Asos warehouse workers were employed by the agency Transline on “unacceptable” pay rates and with few benefits.
M&S staff were permanent and could to some extent negotiate their rotas. The Community union, which has recently begun to represent Asos staff, claimed they could be sent home without pay if they weren’t needed.
Asos claims it was entirely misrepresented by the former chair of the business select committee, Iain Wright, when he called for a halt to such practices. However, Asos subsequently terminated the contract with Transline, increased the number of permanent contracts and raised workers’ wages by about 10%.
The Community union reckons Asos is on the right path. To verify that, the new business committee chair, Labour’s Rachel Reeves, should prioritise a visit and see for herself.