Slowdown fears ease as sales rise

THERE WERE fresh signs yesterday that the British economy is back on track as retailers reported rising sales and a survey of the UK financial sector revealed sharp increases in optimism.

The British Retail Consortium said that, like-for-like, sales last month were 3.9 per cent higher than in the period last year, and total sales were up 7.3 per cent. The opening of the giant Bluewater shopping centre in Kent boosted the retail numbers, while good weather helped sales of spring clothes and do-it-yourself products.

But the BRC cautioned that the timing of the Easter weekend - earlier this year than last - may have distorted the figures. Excluding sales in the week before Easter, like-for-like sales were up by just 0.9 per cent.

The Confederation of British Industry said confidence in UK financial institutions improved for the first time in a year after a marked pick- up in business volumes.

The latest CBI/PricewaterhouseCoopers financial services survey found that 38 per cent of firms were more optimistic in March than in December, with 14 per cent more pessimistic, for a net balance of 24 per cent of optimistic firms, compared with a balance of minus 27 per cent in December and minus 54 per cent in September.

Sudhir Junankar, CBI's associate director of economic analysis, said: "Financial service firms have started to shake off their slowdown fears. Confidence seems to be returning following the lows of the second half of last year, which then reflected concern about world financial turmoil and the apparent threat of a UK recession."

Financial services firms reported a pick-up in overall business, with a balance of 32 per cent expecting this growth to continue into the next quarter. Almost all sectors anticipated significant growth, the CBI said, particularly banks and life insurers. General insurers and building societies were among the few groups expecting volumes to decline.

Employment rose at its fastest rate since the fourth quarter of 1997. However, most companies expected to cut jobs in the next three months.

Mr Junankar said that financial services profitability rose as expected in the first quarter, but the squeeze on margins at banks is expected to persist through the next three months. The profits outlook for building societies was said to be brighter.