U.K. November Retail Sales Index Matches 25-Year Low, CBI Says

By Svenja O'Donnell and Jennifer Ryan

Nov. 28 (Bloomberg) -- A U.K. retail sales index matched a 25-year low in November as the recession prompted consumers to shun stores, the Confederation of British Industry said.

The survey of retailers showed 16 percent reporting higher sales and 62 percent showing a drop. The balance of minus 46 matched that for August, which was the lowest since the survey began in 1983, the biggest U.K. business lobby said today.

Consumer spending dropped the most since 1995 in the third quarter and U.K. house prices fell for a 13th month in November, data released this week showed. Chancellor of the Exchequer Alistair Darling has pledged a cut in sales tax to get Britons shopping and help prevent the recession from deepening.

``Christmas is going to be extremely tough this year, with retailers having to work harder than ever to keep the tills ringing,'' Andy Clarke, chairman of the CBI's survey panel and retail director at Wal-Mart Stores Inc.'s Asda store chain, said in a statement. ``Consumer durables, furniture, carpets and DIY are really being hit, and with a thawing of the housing market remote, this is unlikely to change.''

Motor traders endured ``sharply falling'' sales for a fifth month, with a net balance of 86 percent reporting a drop from a year earlier, the CBI said. For December, 98 percent of them anticipate lower sales, the report showed.

The survey of 185 retailers, which hasn't shown a positive balance since March, was conducted between Oct. 28 and Nov. 12, the CBI said.

Woolworths, MFI

Woolworths Group Plc placed its stores in administration this week and MFI Retail Ltd., a 44-year-old furniture retailer, collapsed. The filings have put almost 30,000 U.K. jobs at risk.

Darling's pledge to cut value-added tax to 15 percent from 17.5 percent is part of the nation's biggest fiscal stimulus since 1988 to shore up the economy, with measures that will push the government budget deficit to 118 billion pounds ($182 billion) next year.

The U.K. economy may contract by 1.1 percent next year, the most since 1991, easing inflation pressures in the economy and giving the central bank room to cut the key interest rate 1 percentage point from the current 3 percent in the first half of 2009, the Organization for Economic Cooperation and Development said Nov. 25.

To contact the reporters on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net; Jennifer Ryan in London at Jryan13@bloomberg.net.