British retail sales tumbled in January as non-essential shops went back into lockdowns, official data showed, but lower-than-expected public borrowing offered some relief to finance minister Rishi Sunak as he prepares a budget plan.
Retail sales volumes fell 8.2% compared with December, a far bigger fall than the 2.5% decrease forecast in a Reuters poll of economists and the second largest on record after the fall in April 2020, at the start of the pandemic.
"The decrease seen this time was not as large as that of the first lockdown, as some stores have adapted to the current circumstances, with services such as click-and-collect helping to cushion the fall," ONS statistician Jonathan Athow said.
The Office for National Statistics also said public sector borrowing for January came in at 8.8 billion pounds ($12.3 billion), its first January deficit in a decade, but a lot less than a forecast of 24.5 billion pounds in the Reuters poll.
That took borrowing since the start of the financial year in April to 270.6 billion pounds, reflecting the huge increase in spending and tax cuts ordered by Sunak since the start of the pandemic.
Sunak is due to announce his next spending and tax plans on March 3 when he is expected to extend the government's wages subsidies, at least for the hardest-hit sectors of the economy.
The ONS data also showed public debt rose to 2.115 trillion pounds or 97.9% of gross domestic product, a share not seen since the early 1960s.
Britain's economy - which had its biggest slump in 300 years in 2020 when it shrank by 10% - is on course to contract by 4% in the first three months of 2021, according to the Bank of England, due to the latest lockdowns.
Prime Minister Boris Johnson has said he will lift the lockdown in England only gradually.
But Britain's rollout of COVID-19 vaccinations - Europe's fastest program so far - has raised the prospect of a bounce-back later this year.
A survey published earlier on Friday showed British consumers were their most confident since the COVID-19 pandemic struck almost a year ago.
Friday's ONS data showed the month-on-month fall in retail sales between December and January was steeper than a fall of 4.0% in November, when non-essential retailers were also closed.
In April last year, shortly after the first lockdown began, sales volumes plunged 18.0%.
Sales in January were down 5.9% compared with the same month in 2020.
Department stores and clothing stores saw the sharpest fall in sales last month, while online shopping rose to its highest ever share of total spending at 35.2%.