U.K. retail sales see biggest drop in six months in June

Office for National Statistics earlier on Thursday reported UK retail sales for the month of June which showed their sharpest monthly fall in six months. The ONS said that during the June period, sales volumes fell 0.9 percent, a bigger drop than forecasts of a 0.6 percent dip, after rising by an above-average 0.9 percent in May.

Compared with a year earlier, June sales growth slowed to 4.3 percent from a robust 5.7 percent in May, a bigger decline than the easing to 5.0 percent forecast. For the second quarter, volumes were up 4.9 percent from a year ago compared with 4.1 percent growth in the first three months of 2016, the best since Q1 2015.

The monthly survey was carried out between May 29 and July 2, which implies some responses were received in the week following the June 23 Brexit referendum. Thursday's figures were the first official data which might potentially have shed light on how demand was affected by the referendum, after other measures painted a mixed picture of consumer demand.

A gauge of consumer confidence fell at the fastest pace in 21 years after the vote. Consumer spending has been a major driver of Britain's economic expansion over past three years, poor data raises the chance that the Brexit vote will tip the economy into recession.

“In our view, the resulting drag on real household incomes will undermine the ability of households to continue spending as vigorously as they have been in recent months,” notes Lloyds Bank in a report.