The UK’s Q4 output figures were unquestionably bad – snow or not. However, they were hardly surprising. After all, many consumers have overspent in recent years and are now reining in their finances. It will take considerably time to re-align the UK economy. Nonetheless, if lacklustre growth figures continue, they are bound to delay the cutting of the UK’s excessive public sector net borrowing.
The political focus has now shifted to stimulating growth. However, this will not be achieved by whether or not the Government’s Growth White Paper is published or not. Frankly, who cares? A plethora of Energy White Papers has hardly yielded much progress. Generating growth will be achieved mainly by letting the market drive the process. Banks should lend money if the borrower’s business plan really is credible.
Recently, two retailers – Supergroup and Mulberry - have shown how you buck the trend: both have become stock market darlings. In Supergroup's case, from modest beginnings in Cheltenham, its Superdry and Cult brands have boomed – its products are now exported to some 70 countries. Over the two-month period straddling Christmas, group sales rose by over 90%, despite its men’s and women’s clothes being sold as premium brands. Not surprisingly, its shares have trebled since last March.
Out of rustic Shepton Mallet, Mulberry’s leather handbags, such as the Alexa, are selling like hot cakes. Like-for-like sales (outside the discount stores) were up by over 60% during the Christmas period. Mulberry’s shares have risen eightfold from their low point over the last year and the Company is now worth c£800 million. Without getting into Andy Gray sexism territory, the female of the species is probably better informed about handbag trends. Hence, whether Mulberry and Supergroup will be prospering in five years’ time is uncertain. But they – and their like – are crucial to the UK’s faltering economic recovery.
