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Leisure
THE leisure sector — hotels, pubs and restaurants — has taken the brunt of the recession so far and that seems likely to continue.
Consumers have been eating and drinking at home rather than enjoying expensive meals out, a trend that has already claimed several high profile victims.
The company behind the Walkabout pub chain is desperately seeking a rescue deal and industry figures say up to six pubs a day are calling time across Britain.
The hotel sector in particular has been battered, with only budget operators such as Premier Inn able to claim they have had a good recession.
Shopping
This year it appears that retailers will be right in predicting Christmas will be tough. Top retail bosses including Topshop owner Sir Philip Green have been saying for months that talk that the recession was over looked premature.
The high street is likely to find life difficult in the months ahead. The likely winners will be, again, the supermarket chains. All of the big four — Tesco, Asda, Sainsbury's and Morrisons — have seen their sales leap in the past year. Some shoppers may now choose to do nearly their entire Christmas shop in one giant Tesco. Good for Tesco — bad for the rest of the retailing industry.
Sterling
The pound tumbled against the dollar and the euro today as the appalling figures sent shockwaves through the money markets.
While the US, Europe and Japan head towards recovery, pressure on sterling is increasing as investors move out of Britain and into more robust economies. The pound was down 2.5 cents against the US dollar to $1.637 and 1.73 cents against the euro to 1.088. The decline is bad news for anyone travelling abroad, but it is good news for exporters who benefit from a weak pound because it makes goods cheaper for foreign buyers. Analysts expect sterling to be at parity with the euro soon.
Interest rates
Interest rates look likely to stay at record lows well into next year. Economists said the Bank of England will not raise rates from the current level of 0.5 per cent
while the economy is so weak. That is good news for millions of households who have seen their
mortgage costs slashed — but not for savers who have seen returns on their cash evaporate.
The Bank must next month decide whether to extend quantitative easing — printing money — beyond the £175 billion already spent. It was thought the programme might go on hold but economists now predict it will go to £200 billion.
Unemployment
Today's figures raise fears that unemployment will top three million — 10 per cent of the workforce. The jobless total rose by 88,000 in June, July and August, far less than expected, to 2.47 million, sparking hopes that it did not have much further to go.
TUC general secretary Brendan Barber said: “Even if we had achieved a technical recovery today, it would not feel like a recovery to the thousands losing their jobs or afraid that they will
join the dole queue. Politicians cannot now say that the recession is over. Fighting unemployment — particularly among the young — must be national priority No 1.”
Property
The fledgling recovery in the property market is now at risk as the depth of the recession threatens to push prices lower. Low interest rates could underpin demand among buyers — but only if the dire state of the economy does not sap confidence in the market.
Mortgage lender Halifax said house prices rose 1.6 per cent last month and are now higher than they were at the end of 2008.
Howard Archer, chief UK economist at IHS Global Insight, said: “With unemployment high and still rising and earnings growth low and still falling, we suspect that the firming in prices will fizzle out.”
