UK: scaling the Apr-20 sales hit to GDP
- Retail sales collapsed by 18% m-o-m in Apr-20 (15% ex-fuel), taking the total decline to 22%. The overall hit appears to closely coincide with the rise in universal credit declarations, rather than preceding it at all.- Although the April hit was 3.5 times the size of March, this average scaling factor is distorted by the abrupt turn around for supermarkets and department stores. The average scaling factor is otherwise about 1.8, and less in the hardest-hit areas.
- I have trimmed my Q2 GDP forecast by another 1pp to -11.5% q-o-q, which contains an average scaling factor of 1.7. The BoE’s -25% Q2 projection requires something nearer 4x, with little payback, despite many businesses reopening.
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