Growth? Maybe. Maybe not.

It’s hard to quite square the news from IBEC yesterday that there will be 1.8 per cent growth this year and ‘rising consumer sentiment’ with the other finding that consumer demand will not increase and also this from the Sunday Business Post at the weekend. Reports by KPMG and RSM Farrell Grant Sparks both suggest that:

…retailers would struggle, with consumer spending likely to fall heavily this year as a result of the increased tax and austerity in December’s budget.
Despite many shops reporting brisk business over Christmas, the reports question whether sales were strong enough to save a number of struggling businesses.
The two reports come in the same week as a receiver was installed at HMV’s 16 Irish outlets and an examiner appointed to 12 stores in the Pamela Scott fashion group.

Interestingly they suggest that many retailers used the Christmas period to push for ‘early sales’ rather than holding off until the post-Christmas period. And they suggest that this will have negative impacts on earnings, which stands to reason. If I can sell x at a higher price from December 1st to 31st, then cutting the price on the 26th doesn’t just lose potential sales at the higher price for the rest of December but also eats into sales that would have occurred in January. But in a way who can blame retailers, particularly when one reads the rest of the SBP piece?

In an analysis of the retail market, Farrell Grant Sparks said that 277 retail firms had gone into liquidation, receivership or examinership last year, adding that “significant uncertainty is likely to prevail in the coming weeks and months”.
It added that there would also be implications from the retail downturn in Britain, which would have an impact on Irish subsidiaries, as seen in the case of HMV.
In a separate report, KPMG’s restructuring department predicted a large number of retail restructurings during 2013.

It’s this that makes the IBEC report seem so – well, panglossian is the term that springs to mind. IBEC’s prediction is for growth somewhat ahead of government rates, but what is it built on? And given the now predictable (‘certainty’ copyright E Kenny) taxes and charges racing towards citizens for later in the year one wonders at the ability of the economy to absorb a fifth, or is it sixth, year of austerity.

And of course it’s not just austerity. The good news never stops…