UK retail sales surge before lockdown easing, borrowing leaps, too

British retail sales jumped last month before a partial lifting of coronavirus restrictions, suggesting an economic rebound is under way, but official data also showed record peacetime government borrowing. 

Sales volumes leapt by 5.4 per cent in March from February, the Office for National Statistics said, with clothing stores benefiting especially.

Economists polled by Reuters had expected a month-on-month increase of 1.5 per cent.

The ONS said the data reflected "the effect of the easing of coronavirus restrictions on consumer spending".

"March's strong rise in retail sales showed that the economy made a fair bit of progress even before non-essential retailers reopened in April," Paul Dales, an economist with Capital Economics, said.

Separate data showed Britain's government borrowed 303.1 billion pounds ($420.1b) in the financial year which ended last month, a surge of 246 billion pounds on the previous year and the biggest share of the economy in peacetime.

Borrowing stood at 14.5 per cent of economic output, the highest such ratio since 1946, after World War Two, when it was 15.2 per cent.

The numbers reflected the surge in public spending and tax cuts to offset the economic hit from the Covid-19 pandemic.

Britain's economy slumped by almost 10 per cent last year, its biggest collapse in more than three centuries, but it is expected to grow by more than 5 per cent in 2021 and 2022, according to the International Monetary Fund.

The Bank of England is waiting to see the extent to which households spend their lockdown savings as it assesses how long it needs to keep its huge stimulus plan in place.

British consumer sentiment rose to its highest since the start of the pandemic this month, a closely watched survey showed on Friday, but the increase was smaller than economists had expected.

The ONS said retail sales were up 7.2 per cent compared with March 2020 when the pandemic was spreading in most Western economies.

The ONS said the share of shopping done online slipped from a record high in February to 34.7 per cent in March.

Many retailers have expanded their online operations quickly in response to three lockdowns over the past year.