Retail sales jump in April thanks to alcohol and cigarettes

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23rd May 2022

Bite-sized business news from the UK and beyond

Good morning Hooray! This is the final five-day working week before the two Platinum Jubilee bank holidays next week.

Today's stories

Retail sales jump in April thanks to alcohol and cigarettes
British banking app pioneer eyes American listing

ECONOMY
Retail sales jump in April thanks to alcohol and cigarettes

What happened?
UK retail sales unexpectedly rose last month by 1.4%, better than the 0.2% dip expected by analysts.

The increase was driven by spending on alcohol, confectionary and tobacco in supermarkets, as well as higher clothing sales online. Fuel sales also increased after a record jump in prices led to a sharp fall the previous month.

Despite the cost of living squeeze Brits are still spending
In April energy bills rose by 54%, National Insurance contributions increased and inflation reached a 40-year high at 9%.

All this should be a recipe for lower consumer spending but so far that hasn’t been the case.

According to the Office for National Statistics, consumers are treating themselves to supermarket alcohol, tobacco and sweet treats, as they try to save money by staying in instead of dining out.

Online clothes sales were also up as consumers refreshed their wardrobes ready for summer holidays and weddings, after two years of Covid postponements.

But economists don’t expect the increases to continue boost
The closely watched GfK consumer confidence survey fell to -40 this month, down from -38 in April and the lowest since records began in 1974. It suggests that Brits are feeling more pessimistic about the future than during the 2008 global financial crisis, the impact of Brexit on the economy or the Covid lockdowns.

Other stories to keep you in the loop

Plans to keep passengers moving and shelves stocked as rail strike looms
UK should expect high fuel bills for at least 18 months, E.ON boss says
Shares in THG soar as multibillion-pound bidding war looms for online beauty retailer
Nationwide profits rocket as it tells struggling members “talk to us”
Fat Face eyes hunt for new buyer after recruiting bankers
Russia halts gas supplies to Finland as payments row with the west escalates

FINTECH
British banking app pioneer eyes American listing

What happened?
Atom Bank, the UK’s first app-only bank, is planning to list its shares on the New York Stock Exchange in a deal worth £700m, according to Sky News.

Founded in 2014, Atom offers mortgages, savings accounts and small business loans. Last November it became the biggest UK employer to introduce a four-day week to all staff.

The Durham-based lender is exploring using a special purpose acquisition company (SPAC) set up by Donald Trump’s former commerce secretary and well-known Wall Street financier Wilbur Ross.

What’s a SPAC?
SPACs are shell companies with the sole intention of finding operating businesses to combine with. They were introduced as a trendier alternative to the traditional method of going public ie the IPO. SPACs are seen as a way for fast growing companies to get access to capital quickly and without the cost and faff of an IPO.

SPACs enjoyed a strong run of popularity over the past couple of years but there are clear signs the market is slowing down.

So far in 2022, only 67 SPACs have gone public, raising $11.6bn versus the 613 SPACs which raised $162.5bn last year. The slow down has been driven by the jumpy stock markets and the US financial regulator’s increased scrutiny over them.

If the deal goes through it will be a blow for the UK government
For months government ministers have been on a charm offensive to try and attract more tech firms to list in London. Last year Cazoo, the British digital car-buying platform floated in New York and Cambridge-based chip designer Arm looks set to be listed in the US by its Japanese owners later this year.

Going public in 2022 will be a tough ask
According to close sources, plans for the Atom SPAC are at an advanced stage. But growing concerns over inflation and the possibility of a recession, has hit the stock markets hard in 2022 – the US S&P 500 index is down 20% so far this year. Against this backdrop there are no guarantees the deal would go ahead.

Stat of the day

According to the new Sunday Times Rich List, the UK now has a record 177 billionaires with a combined wealth of £653bn, a 9% increase on 2021

Interesting links from around the web

The 7 habits of highly effective investors
Why are Apple Watches rectangles instead of circles?
The death of 'mandatory fun' in the office

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Retail sales jump in April thanks to alcohol and cigarettes

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