• VAT dodge thought to be costing UK £110m a year
• Low website prices forcing hundreds of shops to shut |
Boxed sets of series one to three of Channel 4’s teen drama Skins can be bought online for £17.99, just under the threshold of £18 at which VAT applies Photograph: Channel 4 |
The controversial online sale of VAT-free CDs exploded at the end of last year, driving one in three purchases by British music-lovers on to the web. The surge in sales casts doubt over Treasury claims to be tackling the tax dodge, already thought to be costing the exchequer £110m a year and rising. |
Websites operated by HMV, Tesco, Amazon, Play.com, Asda, WH Smith and Woolworths structure almost all their online CD and DVD transactions as personal imports from the Channel Islands. As a result they are able to offer unbeatable VAT-free prices, threatening the futures of music stores and sapping tax revenues. |
Data from market research firm Kantar shows that 16.5m CDs were bought by British customers over the internet in the last three months of 2009 at an average price of £7.80. Over the same busy pre-Christmas period, 26.6m DVDs were bought online at an average price of £9.36. Read more at www.guardian.co.uk |
Sharp rise in government spending and drop in tax receipts means Britain borrowed another £4.3bn last month rather than repaying £2.8bn as economists expected |
Alistair Darling’s £178bn forecast for deficit for the year as a whole is under pressure. Photograph: Eric Piermont/AFP/Getty Images |
The British government has posted its worst borrowing figures on record for a January in another blow to Britain’s attempts to reassure other countries it is not the next Greece or Spain. |
A sharp rise in government spending and a drop in tax receipts from businesses hit by the deepest recession in decades meant that Britain was unable to post the usual surplus enjoyed in a January, a month when income tax and corporation tax revenues typically pick up. In fact, by the government’s preferred measure of the public coffers, there was a deficit last month – the first January when the government was forced to borrow since records began in 1993. Read more at www.guardian.co.uk |
Fears of a double-dip recession intensified this morning as the sharpest
monthly fall in retail sales in one and a half years was revealed.
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The downbeat spending figures come the morning after a shock rise in public
sector borrowing emerged, casting doubt over the recovery. The £4.3 billion
deficit for last month is the first time on record that the Treasury has not
recorded a January surplus.
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Treasury coffers were hit by a plunge in tax receipts prompting concern that
Britain’s finances could be worse than those of Greece.
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| Between December and January, total sales volumes decreased by
1.8 per cent, the largest decrease since June 2008, |
The retailing data is also likely to reinforce expectation that interest rates
will remain on hold for the most of this year, despite recent rises in
inflation.
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| Add into the mix the ongoing urge to
save or to pay down debt, plus the impending rise in income taxes, and
consumer spending seems likely to continue to spiral downwards in the months
aheadRead more at business.timesonline.co.uk |
When people lack money, the proliferation of sales exacerbates this kind of behaviour. | Shopping is an activity we undertake alone amid throngs of strangers, an experience very similar to freeway driving, where we motor alongside hundreds of other unknown drivers. Both driving and shopping tend to be anti-cooperative. Each can foster aggression. |
| “competitive consumption,” in which a “hard-won purchase becomes a trophy for valor in combat.” |
| Throughout U.S. history, citizens used the street as a public space for ordinary people to express their grievances to the powers-that-be. |
| The street has become a private thoroughfare, linking people to cars and roads. This nexus isolates citizens as atomized shoppers making their way to and from sprawling malls. The public space has become a realm of private aggression. |
| Amid widespread job-destruction, the question of what it will take to make consuming crowds give way to protesting crowds looms large. |
| the consumer discretionary sector |
| is posting earnings 348% higher than a year ago and 30% above what analysts had predicted. |
| In 2009, the S&P Consumer Discretionary index advanced 38.8%, rebounding from a 34.7% drop in 2008. This year, O’Rourke says, investors are looking not just for profit growth, but for sales expansion. |
While all consumers still feel some economic pinch, wealthy and upper-middle-class consumers are growing more confident, says Lisa Walters, principal at research and consulting firm Retail Eye Partners in New York. Lower-income consumers—many living “paycheck-to-paycheck,” Walters says—continue to favor value retailers such as Wal-Mart Stores (WMT) and Target (TGT). Read more at www.businessweek.com |
The VAT increase and unprecedented blizzards last month contributed to a
sudden and unexpected collapse in retail sales, according to the British
Retail Consortium. Its sales monitor registered a 0.7pc drop in
like-for-like sales last month, compared with a year before – the steepest
January fall since the survey began in 1995, and in stark contrast to
economists’ expectations of an increase of 0.5pc.
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The figures come amid concern about Britain’s capacity to finance itself in
the international capital markets, with the spread between interest rates on
benchmark UK gilts and German bunds widening, and arrive only days after the
Bank of England signalled an end to its Quantitative Easing programme.
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| With the temporary VAT tax cut having been withdrawn and the
car scrappage scheme finishing at the end of March, economists put a
significant probability on Britain dipping back into contraction early this
year.
Read more at www.telegraph.co.uk |
The cost of food and petrol has shown a shock rise, despite supermarket promises of January price cuts. |
At the same time, the price of unleaded petrol is close to 30 per cent higher than a year ago amid evidence that some supermarkets have abandoned cost-cutting. |
The shopping basket of 37 items came in at £53.63, which equates to a
rise of 7.5 per cent, making it the biggest annual increase since May
last year. |
All this comes on the back of official figures showing millions of workers in the private sector have suffered pay freezes and even cuts in the past year. |
AA figures show that owners of unleaded petrol cars are having to find an extra £27 a month to cover their fuel costs compared with this time last year. |
| the Chinese economy is just waiting for an excuse to blow up. |
| In America, developers put up condos that are left empty. |
But in China, they build entire cities…which become ghost towns before they ever lived. |
| They lower interest rates to try to revive a dying economy. The lower rates buy time – and more debt. Debtors are able to hold off the day of reckoning by refinancing at lower rates. |
| Imagine a fellow who’s built a group of condos. He spent all his money…and borrowed millions more to do the project. Now, he’s waiting for buyers…and paying interest. |
| he refinances his old debt…adds more new debt…and he’s able to keep going…waiting for a ‘recovery’ that brings the buyers back. |
| The real problem is not a lack of affordable credit. It’s a lack of able buyers. |
| What Wall Street bank will tell clients that the economy is in a depression? |
| will admit that there is nothing they can do – except make the situation worse? |
Binge shopping must be like binge drinking. It doesn’t feel so good the morning after. The retailers can’t be making much profit at 75% discounts. Bodes ill for 2010 economic growth prospects. Thousands of bargain hunters descended on high streets and shopping centres around the country yesterday for what were thought to be the biggest Boxing Day sales ever. Stores extended their opening hours to cope with the surge in shoppers, which retail analysts believe is due to Boxing Day falling on a Saturday, and shoppers’ desire to snap up big-ticket purchases such as TVs before VAT rises to 17.5 per cent on 1 January. |
| Discounts of 75 per cent off designer labels such as Alexander McQueen saw Selfridges’ flagship London store beat last year’s sales record |
| The current surge comes after a disappointing December for retailers. |
| “This will have been the biggest retail Boxing Day we have ever had,” said Richard Dodd, a spokesman for the British Retail Consortium. “This is due to a combination of the fact that retail is still difficult, so shops are battling to get customers, and the fact that Saturday is always the biggest day of the five-day sales. Read more at www.independent.co.uk |
Perhaps, this is the last commercially driven Christmas? Giving could become real then. Sorry, just dreaming … or am I?
| emergency measures around the world to avert another depression have kept economies flush with liquidity and cut interest rates (and monthly mortgage payments) to historically low levels. Inflation is low or negative. |
| “Two-thirds of Spanish society has never had it so good.” And Spain’s splurge of fiscal stimulus is in essence no different from what was done in the UK or the US. |
Yet skies above Madrid – and Washington, London, Athens and Dublin – grow darker each day.
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Everyone knows these governments urgently need to cut spending and raise taxes, but for both political and economic reasons the necessary medicine will be brutally hard to administer, especially if interest rates start to rise. |
| Moody’s, the credit rating agency that this week put Spain at the top of its new “misery index”, a combined measure of unemployment and fiscal deficit, said the people of several countries such as Ireland and Hungary would now need to make “a great sacrifice”.Read more at www.ft.com |
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Boom in sales of tax-free CDs casts doubt on Treasury claims
