Spending till, the crunch

20 June 2008 By Ian Campbell

UK retail sales reportedly boomed in May. But money growth, after some years of inflationgenerating laxity, is contracting sharply. Whether the central bank raises rates again or not, a bleak period lies ahead for growth, banks and public finances.

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UK retail sales rose by 3.5% in May from April, the biggest monthly increase since the series began in 1986, and by 8.1% on May 2007, the biggest annual rise since 2002, according to the national statistics office.

UK consumer confidence fell in May to an 18year low, according to the GfK NOP research company.

UK sterling broad money (M4) growth dropped to a 10% annual rate in May, according to the Bank of England, from 12.2% annual growth as recently as February.

The Council of Mortgage Lenders reported that gross mortgage lending fell by 2.3% from April to £25.5 billion in May. The figure was 19% down on May 2007.

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