Morning Update

UK Retail Sales fell well shy of expectations this morning, shrinking 1.2% on a monthly basis between May and June.

Given that the general market consensus was pointing to a -0.4% print, the ONS cited uncertainty around the election in addition to poor weather and low footfall for the drop in sales. This came as sales volumes fell across almost all sectors with department stores and household goods seeing the most significant falls of 3.4% and 2.1%, respectively.

On an annual basis, the index contracted 0.2%, again coming in lower than the expected 0.2% expansion.

With the UK’s retail sector accounting for £112.8 billion of economic output in 2023 (or around 4.9% of the country’s GDP), today’s figures reveal the scale of the challenges still facing this major part of the economy.

In a recent document published by the House of Commons Library, the article highlighted how longer-term challenges facing the retail sector have merely been exacerbated by the pandemic and cost of living crisis. Here, it cited research from the Centre for Retail Research which said that the retail industry has been subject to a “permacrisis” since the 2008 financial crisis.

Firstly, the Centre for Retail Research said that “Rapid debt-fuelled expansion of shops in the 2000s” had “pushed city centre rents to astronomical levels.” This meant that high rental costs put considerable pressure on profit margins which amongst other things meant that there was “low investment in stores and weak forward planning to meet the challenges of the new retailing”.

While challenges facing the UK retail sector was highlighted in the State Opening of Parliament, key figures such as the Chief Executive of the New West End Company which works with over 600 business said that “thorny issues” such as a “much-needed business rates reform” and “a review of tax-free shopping” was needed.

For more on the topic, the full article can be found here.

The political situation is growing increasingly fragile in Kenya with at least 50 people believed to have been killed since recent protests began.

Yesterday, the highest court overruled the Police force’s attempts to ban demonstrations in Kenya’s capital Nairobi. The police force cited how criminal gangs had infiltrated protesters with violence spreading across the city.

Instability has reached a recent zenith in Kenya following the government’s proposals to introduce a new fiscal bill which seeks to heighten taxes.

The proposed fiscal bill would seek to raise an additional $2.3bn in over the coming year, through raising taxes and cutting public spending. According to Kenya’s Treasury Secretary, if left unchanged, there would be a further $1.5bn gap in the country’s finances. With Kenya’s Debt-to-GDP also standing at 68%, concern has been growing in Nairobi over the country’s fiscal position. Already, just under 40% of Kenya’s tax revenues is spent on covering the interest payments on its debt.

Last month, protestors stormed the Kenyan parliament on 25th June with wider unrest seeing government forces and demonstrators clash.

Despite President William Ruto subsequently withdrawing the legislation, and dismissing a sizeable number of those around him, the protests have continued with many demanding Ruto’s resignation.

Protestors are also calling for the officials to clean up corruption in the country. (In 2017, for instance, Washington halted funding to Kenya over widespread corruption in the Ministry of Health).

Mass IT outages have been reported across banks, media outlets and airlines with flights being grounded, tv transmissions ceasing and trains being halted.

Countries affected include the UK, US and Australia.

This is a developing story, and updates can be followed via this BBC page: Planes grounded as mass worldwide IT outage hits airlines, media and banks – BBC News