UK shoppers rein in spending as Brexit nears

Retail sales volumes fell 0.2 percent in the fourth quarter after a 0.2 percent rise in the three months to November. (AFP)
Updated 18 January 2019
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UK shoppers rein in spending as Brexit nears

  • Retail sales volumes fell 0.2 percent in the fourth quarter after a 0.2 percent rise in the three months to November
  • Businesses are also cutting investment before Britain’s scheduled departure from the EU in late March

LONDON: British shoppers cut back on spending in the three months to December for the first time since last spring, adding to evidence of a consumer slowdown as Brexit approaches, data showed on Friday.
Retail sales volumes fell 0.2 percent in the fourth quarter after a 0.2 percent rise in the three months to November, the Office for National Statistics (ONS) said.
Friday’s data chimed with other signs that consumer spending is cooling after a strong summer.
Businesses are also cutting investment before Britain’s scheduled departure from the European Union in late March, leaving the overall economy growing at a snail’s pace.
In December alone, retail sales fell 0.9 percent, recoiling after November’s Black Friday splurges, but were 3.0 percent higher than a year earlier. Both readings were below economists’ forecasts in a Reuters poll.
“A major concern for retailers will be that already cautious consumers further limit their spending in the near term at least due to the heightened uncertainties over Brexit,” economist Howard Archer from the EY ITEM Club consultancy said.
Sterling and British government bonds were little changed after the data.
The ONS said the value of sales fell for the first time in three years in the three months to December, underlining a squeeze on retailers’ profit margins as they battle for customers.
A survey last week from the British Retail Consortium showed retailers failed to increase Christmas sales for the first time since the depths of the global financial crisis a decade ago.
Supermarkets Sainsbury’s and Morrison missed Christmas sales forecasts though Tesco beat them. Clothing retailer Next and department store John Lewis reported a late surge in demand.
The ONS data showed a drop in sales of carpets and floor coverings, possibly reflecting a stalling housing market.
While disarray over Brexit has weighed on consumer confidence, there has been some comfort for households recently with the fastest underlying pay growth since 2008 and inflation falling to an almost two-year low of 2.1 percent.
Highlighting the easing of inflation pressures, the ONS’s measure of annual price increases in stores cooled to 0.6 percent in December from 1.3 percent in November, the smallest uptick in more than two years.


Russian court jails US investor pending fraud trial

Updated 16 February 2019
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Russian court jails US investor pending fraud trial

MOSCOW: A Russian court on Saturday jailed the US founder of a major investment firm for two months over fraud charges he says were fabricated for use in a shareholder battle.
Michael Calvey, founder of the multi-billion-dollar investment fund Baring Vostok Capital Partners (BVCP), was placed under arrest until April 13 as he and five others await trial on charges they embezzled 2.5 billion rubles ($37.7 million).
Authorities detained four BVCP employees on Friday, including French national Phillipe Delpal.
Two other suspects include a former fund employee and someone at another firm mentioned in the probe. All six are now under pre-trial arrest.
In a statement Saturday, Baring Vostok said the claims made against its employees “have no merit.”
The case has already drawn comparisons to other high-profile probes against foreign investors in Russia, notably one against Bill Browder and the Hermitage Capital fund.
Ironically, it comes as Russia hosts a high-profile investment forum in its Black Sea city Sochi.
Calvey says he is innocent and argued in court that the probe is a bid to exert pressure on him amid a shareholder conflict within Vostochniy Bank, which he is trying to resolve in a London arbitration court.
The charges against him are intended to “pressure Baring Vostok to drop its arbitration claims in London or to obstruct the new share emission of Vostochniy Bank,” Calvey alleged according to a statement by Baring Vostok on Saturday.
Investigators say that a firm controlled by Calvey in 2017 owed 2.5 billion rubles to Vostochniy bank and paid the debt with a 59.9 percent stake in the Luxembourg company International Financial Technology Group (IFTG), which was valued at three billion rubles.
The investigators claim that IFTG’s real value was only 600,000 rubles.
The fraud claim against Calvey was filed with the FSB security service this month by Sherzod Yusupov, a minority shareholder in Vostochniy Bank, Russian agencies reported.
Baring Vostok controls more than 52 percent of Vostochniy Bank, while 32 percent is owned by Artyom Avetisyan, Russian reports said.
Calvey said in court that he and Avetisyan are tangled in a shareholder dispute, and that by filing the claim Yusupov was in fact acting on Avetisyan’s behalf.
BVCP is a veteran investor in Russia, with current and past projects that include the Internet company Yandex, online retailer Ozon.ru, several drugstore and food store chains, and Russia’s leading online classifieds service Avito.
Some Russian officials have supported Calvey, with Rosnano board chairman Anatoly Chubais calling him “one of the most respected investors” whose efforts “attracted about four billion dollars in foreign direct investment to Russia.”