LONDON/ BRUSSELS: Retail trade volume rose on a monthly basis both in eurozone and EU28 in June, according to the EU’s statistical office. June figure was up 1.1% in eurozone and 1.2% in EU from May, Eurostat said in a statement on Friday. In Eurozone, automotive fuel posted the highest rise in its retail trade volume, rising 1.6% during the same period. It was followed by food, drinks and tobacco (1.2%) and non-food products (1.1%).
In the EU28, the retail trade volume increased by 1.7% for automotive fuel, by 1.3% for non-food products, and by 1.0% for food, drinks and tobacco, it said. The highest increases in the total retail trade volume were registered in Croatia (+6.8%), Germany (+3.5%) and Poland (+2.8%) among member states.
The largest decreases were observed in Portugal (-0.9%), Ireland (-0.8%) and Slovenia (-0.5%),” the statement said. On an annual basis, the calendar adjusted retail sales index went up by 2.6% in the eurozone and by 2.8% in the EU28 in the month.
On the other hand, Bank of England governor Mark Carney on Friday warned that a no-deal Brexit would be a shock for Britain, causing supply disruption and potentially undermining entire sectors of the economy such as the car industry and farming. With no deal the shock to the economy is instantaneous and instantly…. you actually have businesses that are no longer economic, he told media, warning that the number of companies affected could be substantial.
He said that the institution cannot necessarily deliver a growth-boosting package in the event of Brexit without a transition. In a week when the pound capped its worst monthly performance in almost three years, he also said it’s highly unlikely the Bank of England would intervene to support the currency. Analysts expect it to fall further if Britain leaves the EU with no deal.
They don’t want to tell the market that they’re going to go out and do a massive stimulus, even if the market finds it quite hard to believe that they wouldn’t, said Elizabeth Martins, an economist at HSBC Holdings Plc. A really disruptive supply shock to the economy is beyond the scope of monetary policy, but clearly the Bank of England will do what it can.
On Thursday, Carney emphasised that the bank’s reaction will depend on what form of no-deal Brexit occurs, such as a jump to trading on World Trade Organization rules with no mitigating factors, or whether there is a degree of preparedness on border infrastructure. We will do what we can in those circumstances to support jobs and activity, but there are limits, he said.
He added that the impact of the weaker pound on exports has begun to fade, leaving little room for optimism on whether it will help boost output. Carney also said that in the event of a no-deal Brexit, the falling pound would suddenly increase prices for imported goods such as petrol and food and force up inflation.
This is straight economics, Carney said. The exchange rate adjusts to what is a real economic shock – the change in trading relationship means that incomes would be lower here relative to what they otherwise would have been, for a period of time. It may take a while to get to the sunlit uplands, he added.