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Bank cuts growth forecast as shoppers keep calm and carry on

Shoppers are continuing to spend despite the political turmoil. Credit: PA

Retail sales figures in November are stronger and more upbeat than anyone expected.

The likes of SportsDirect, Superdry and Bonmarché had a shocker last month but it was not the disaster that Mike Ashley described.

Month-on-month, growth was strong. Quarter-on-quarter, it was more modest - but sales were up, by value and volume.

However, note two things: the Office for National Statistics (ONS) is measuring turnover not profits, and the shift online continues apace.

Internet shopping has reached a new peak, more than £1 in five is spent online. The high street shop is no longer the asset it was, and some retailers are struggling to adjust to the change in shopping habits.

The pre-Christmas discounts are aggressive which suggests some retailers are struggling to shift stock. If so, there will be casualties in the New Year.

What’s striking though, is that households seem to be spending money despite all the political turmoil.

  • ITV News Business and Economics Editor Joel Hills on the latest retail figures

The Bank of England kept interest rates on hold this lunchtime. The Bank lowered its growth forecast slightly for the last three months of 2018. It has now pencilled in a GDP rise of 0.2% instead of 0.3%.

The minutes of the Monetary Policy Committee note that “Brexit uncertainties have intensified considerably”.

The Bank is sitting on its hands until the UK’s future trading relationship with the European Union becomes clearer.

The government is pouring greater resource into preparations for a no-deal. The Bank of England has made it clear that a disorderly departure could be catastrophic. Businesses have made it clear they are not ready to adjust to WTO trading terms in March next year.

As politicians argue, business investment continues to fall and the financial markets get jittery, amid the chaos consumer spending remains surprisingly resilient as shoppers keep calm and carry on.