New blows shake hopes for UK economic recovery as IMF delivers warning to George Osborne

 

Slumping High Street sales and halting progress in cutting the deficit dampened hopes of green shoots for the British economy today.

The gloom came as the International Monetary Fund warned Chancellor George Osborne that the UK was “still a long way from a strong and sustainable recovery”, sending the pound tumbling against the dollar.

Retail sales suffered their biggest monthly fall for a year in April, slipping 1.3% as cold weather hit sales of barbecue food and garden furniture, the Office for National Statistics said.

Although the sales were also affected by the timing of Easter, shoppers remain under pressure from wages trailing the cost of living.

HSBC’s chief UK economist, Simon Wells, said: “It seems that every time an upward trend in sales volumes seems to emerge, it is quickly snuffed out. While disappointing, today’s data are a reminder that despite some positive output indicators, the ongoing squeeze on incomes means there is a limit to how quickly growth can pick up.”

Despite a better than expected fall in the deficit to £6.3 billion, April’s figures showed much less of an improvement when a myriad of one-offs are stripped out.

These include the transfer of Royal Mail pension scheme assets and profits from a Bank of England support scheme last year, as well as £3.9 billion in proceeds from the Bank’s quantitative easing efforts  this year — all of which flatter the public finances.

Discounting these the underlying deficit was just £1 billion lower than last year at £10.2 billon.

RBS economist Ross Walker said: “The UK’s deficit-reduction process has stalled once the various one-off transfers and favourable accounting adjustments are stripped out.”

The CBI’s latest manufacturing figures added to the poor news with growth flat in the three months to May, disappointing hopes for a stronger recovery. Capital Economics’ Samuel Tombs said: “It remains hard to see how the export-reliant manufacturing sector can look forward to a sustained period of recovery.”

Minutes of the Bank of England’s latest meeting meanwhile showed Governor Sir Mervyn King maintaining his call for an extra  £25 billion boost to the economy in tandem with two other members, although he was outvoted by the wider committee.

News
i100
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
Sport
Neil Warnock
football'New' manager for Crystal Palace
News
REX/Eye Candy
science
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Voices
voices
Sport
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
News
peopleJustin Bieber accuses paparazzi of acting 'recklessly' after car crash
News
people
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Executive / Account Executive - SW London

£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

PA to CEO / Executive Secretary

£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Management Accountant

£30-35k + Excellent Benefits: Guru Careers: We are seeking a Management Accoun...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis