UK retail sales likely dropped in June; budget deficit expected to have improved weakly

UK retail sales are likely to have declined in June. In the month of May, UK’s retail sales, excluding auto fuels rose 1 percent on sequential basis, following a stronger rise in April. June’s data is likely to show a pause for breath to reflect referendum uncertainty. Retail sales in June are expected to have dropped 1 percent month-on-month, reversing all of April’s gain, noted Societe Generale in a research report.

Meanwhile, the PSNBex measure of deficit has been on weak improving trend. It is likely to continue on this trend in the coming months. However, this trend already seemed likely to have fallen short of the OBR’s most recent projections, said Societe Generale.

It is expected to have dropped to GBP 8.7 billion from GBP 9.7 billion. Given that the Brexit uncertainty shock is expected to hurt the growth outlook, the public finances are expected to almost come under stress, added Societe Generale.