With UK heading into a recession it has been a difficult year for the governor of the Bank of England, but one in which his words and actions have had huge ramifications for the retail fashion industry.
First there were increases in interest rates in an attempt to control rising inflation, which had a dramatic effect on consumer spending as shoppers struggled to cope with the resulting hikes in their mortgage payments.
Next came King’s frank forecast at an event in Leeds in October that the UK was indeed entering a recession. The result? The sharpest fall in sterling for 16 years, leaving retailers with the tough call as to whether to forward buy more currency now for 2009 or hold off and risk the consequences of the pound plunging further.
Either way, margins will be impacted at least in the second half of next year, which is likely to have a considerable impact on prices to the consumer. However, the Bank of England’s recent cut in the interest rate to 2% was much needed, but it has yet to warm up consumer spending.