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Tesco and recession's end

Robert Peston | 09:45 UK time, Tuesday, 12 January 2010

Those who were writing the obituaries of Tesco's boom years, and of the propensity of the great British shopper to spend, may have to re-think.

Tesco's shopping trolleysBritain's biggest retailer enjoyed storming growth during the oh-so-important six weeks to 9 January.

Sales in the UK rose a remarkable 8.3% - and 4.9% per unit of selling space, adjusted for the VAT changes and excluding petrol.

This was Tesco's best performance for three years. Recession, what recession?

And it looks a better performance than Sainsbury, whose sales rose 4.2% on a fully adjusted, underlying or like-for-like basis during the 13 weeks to 2 January.

So Sainsbury's plucky attempt to catch up with Tesco may have been staunched a bit.

Equally striking are the figures for December from the British Retail Consortium, which showed a total sales rise by its assorted retailing members of 6%.

It certainly looks as though British consumers pushed the boat out at Christmas and just after - which thanks to the record low interest rates we've been enjoying, we had the resources to do.

Is it all good news?

Not in general and not for all stores groups.

First, Marks and Spencer will face even more challenging questions about why its Christmas has apparently been rather worse than the average (though Debenhams' sales figures today don't sparkle either).

Second, as I have been banging on about for an age, British households remain massively in debt by historic standards, having borrowed more than the value of everything we produce. If there has been a hiatus in paying down that debt, which there may have been, it can only be temporary.

Which means that retailers will probably soon find again that extracting wonga from our pockets is challenging.

Third, interest rates will one day increase (oh yes) - which will only boost shoppers' propensity to spend less and save more.

Fourth, taxes are absolutely certain to rise, which will inevitably dampen spending.

So it's a happy but slightly anxious new year on the High Street.

Oh, and for the record, on the basis of these numbers - and in a technical sense - the recession must have ended.

UPDATE 14:24

Apparently the comparison between the underlying sales performance of Sainsbury and Tesco is muddied by their different treatment of purchases made by customers with loyalty vouchers.

These are included in Tesco's like-for-like figures but not in Sainsbury's - so Sainsbury insists that on a strict interpretation of underlying sales, it is still doing as well (if not better) than Tesco.

I'm not going to adjudicate on this spat, except to point out that the difference between the sales peformance of the two in the latest period plainly isn't very significant.

Comments

  • Comment number 1.

    Robert,

    "...interest rates will one day increase"

    Yes (and they should have already done so) Any idiot can run an economy with zero interest rates for a short time (as the idiots have shown) The problem comes from regaining a stable non-bubble economy and rebalancing the economy toward a sane and sustainable future.

    The fools in change of regulation at present are still digging the hole deeper and lead us to believe that the 'paradise' in which we now live will last - it won't, and it can't!

    Inflation is already rampant in asset prices as an entirely predictable (and predicted) consequence of interest rates - this QE etc. money has been lost - it has provided nothing of value to the Nation - indeed it has devalued what else remains.

  • Comment number 2.

    Why has Tesco only revealed the last 6 weeks figures whereas Sainsbury's brought out 13 week figures?

    How, therefore, Robert can you make the equivalence in your piece?

    Tesco has the greater project of carbon foot print for its food sourcing and limiting the claims of the MMGW brigade

  • Comment number 3.

    I can't say that Tescos figures suprise me, they are the nos 1 supermarket, and now sell more than food, look at the LCD tellies they were knocking out for £199 pounds , they were flying off their shelves. It will be interesting to see though if the model for out of town shopping will hold up if we are to believe the stories floating around over in the states about the tsunami of Treasury bills that are due for payment within the next 6 months.

    Many commentators warn of commercial property armageddon, higher fuel prices and the collapse of the dollar no matter how qucily they print the money the debt will keep increasing, the perfect storm.

    So my point is now that the supermarkets have sucked the life out of the town centres and many businesses have gone to the wall, will the supermarkets with the financial clout(even the government would like them to run local banks I guess) will the Uk suffer from the perfect storm in the US, and if it does will many more bigger retailers who are hanging on having borrowed huge amounts to run their businesses on the cheap money model be engulfed by the likes of Tescos and we will end up with three or four large retailers that do everything.

    Come to think of it, I wonder when we will see the first Tesco hospital



  • Comment number 4.

    This does not concern Peston's picks but I don't know where to comment.
    https://news.bbc.co.uk/2/hi/business/8451665.stm

    "China's exports largely consist of low-value everyday goods like cheap electrical appliances and textiles - but that's a long way from where it wants to be," added Dr Brown.

    "China is aiming for a higher-value economy with higher-value exports.

    Is it wise for a country to give up the manufacture of low value goods altogether? Countries like Germany and Japan struggle in downturns because they produce high end luxuries.

  • Comment number 5.

    it doesn't take much to realise that the massive injections of cash by the bank of england would disguise any real problems. people around me are spending like crazy which seems to be ludicrous. i'm convinced we still haven't experienced the full effect of the financial management of recent months.

  • Comment number 6.

    Told ya!

  • Comment number 7.

    The general public are fools with money, the credit card companies are (still!) fools with credit, the government dare not stop people spending as they need them to spend. Despite all the recession people still have more money not less (at the moment!) because the country is running at an annual loss of about a third of its income - the pain and misery is round the corner but the majority of people have not been saving for the famine - there is a debt disaster heading our way.

    How can spending on Christmas go up 6% when thousands of people are paying their mortgage with their credit card - dear oh dear oh dear.

  • Comment number 8.

    6. At 10:28am on 12 Jan 2010, onward-ho wrote:
    Told ya!

    Yes you did. Why oh why did we not listen ?

  • Comment number 9.

    3. At 10:21am on 12 Jan 2010, romeplebian wrote:

    Come to think of it, I wonder when we will see the first Tesco hospital

    Very soon I think

    https://members.healthinsurance.tescofinance.com/genesys/tscpmimembweb?context=hospital

  • Comment number 10.

    "So it's a happy but slightly anxious new year on the High Street."

    I can't agree these figures represent the continuing trend of the large supermarket groups getting bigger while killing the high street. The large players exploit their power by dominating farmers, wholesalers overseas manufacturing conditions which the high street retailers cannot do. Large supermaket groups build out of town or edge of town sites which take customers away from the high street.

    Here are some examples of how Tesco's have been reported to have made profits:
    In 2005 Tesco and unilever were labled as the two most unethical companies in the UK. in 2006 it was aledged that factories supplying it in Bangladesh used child labour, paid as little as 5 pence per hour and staff were required to work 80+ hours per week. In 2009 it was accused of breaking promises by still demanding 80+ hour weeks at 7 pence per hour pay.
    Milk suppliers regularly claim they are forced to sell milk at a loss, of the retail price of milk over the last 15 years, the farmers share have been reduced from 60% to 35% while at the same time the retailers share has increased tenfold to 30% . Another example is in 1991 potatoes were bought from the supplier at 9p per kg and reatiled at 21p per k, by 2000 the supplier price was still 9p but the retail price rose to 47p.
    The company also charges an admin fee to staff wishing to donate to charity.

    meanwhile the high street is dying. As many as 70000 shops were estimated to close in the UK in 2009. Last year there were 7186 butchers shops in the uk, in 2000 it was 9081 in the 60s/70s it was over 30000. I'm sure the picture is the same for greengrocer,s fishmongers etc. Local shops cannot compete with large supermarkets or the internet. Some of this i accept is progress. A small number of the shops can take very nieche areas however far larger areas will become ghost towns requiring regeneration




  • Comment number 11.

    Does anyone know what Tesco has valued its property portfolio at relative to 2007 prices?

  • Comment number 12.

    4. At 10:25am on 12 Jan 2010, Cecil wrote:

    This does not concern Peston's picks but I don't know where to comment.
    https://news.bbc.co.uk/2/hi/business/8451665.stm

    "China's exports largely consist of low-value everyday goods like cheap electrical appliances and textiles - but that's a long way from where it wants to be," added Dr Brown.

    "China is aiming for a higher-value economy with higher-value exports.

    Is it wise for a country to give up the manufacture of low value goods altogether? Countries like Germany and Japan struggle in downturns because they produce high end luxuries.

    >>>>>>>>>>>>

    China has massive manufacturing capacity and productivity of low value goods which are traded internally to its domestic economy and which keeps its internal economy strong.

    China concentrates on the export of high value, high demand goods not only because many of these are tooe xpensive for the Chinese but also because it is more profitable to export high value goods than low value goods.

    China has good economic management and other advantages in comparison toother nations in terms of their economic 'strength' (I prefer that to using 'growth') - that's why they're becoming the world's leading economic trading nation and global powerhouse.

    Retailers like Tesco have done well this year as they have taken sales off other retailers and more customers have brought e.g. more traditional Christmas fare this year rather than e.g. going out for meals etc over Christmas/New Year. The previous Christmas period was bad for most retailers because the sales strategy for the period was overtaken by the credit crunch. This year leading retailers like Tesco have prepared for a Christamas spending binge and its finished now though. The next few months will be very tight.

    Technically, the concerted effort by all and sundry to fix the last quarter 2009 trading figures may have succeeded in terms of coming out of 'technical recession.'

    But isn't that why our UK GDP /recession watch figures are just bunkum?

    Better to watch a basket of critical indicators - real GDP perhaps? output, unemployment, trade balance of payments etc.

    Cheer up the recession's over (for a short time at least - April 2010?) but what about the underlying double whammy of massive public debt deficit and balance of trade deficit - we have to be in some kind of recession or depression until these two cancers are eradicated.

    It is just a matter of how we define 'recession' - for reasons most politicians don't know - 'we' still use an antiquated measure of estimating every possible sale, trade, value relating to the UK even if that inaccurately is misrepresented, 'double counted' by other countries different businesses in different countries - quite absurd and major questions about accuracy and what is actually being measured!

    How accurate is UK GDP when e.g bank trades and other data are spread around the world with many participants, many countries, many comapnies, tax havens, blackmarkets?

    GDP? Technical recession? Growth? Its all nonsense when the government mortgages our childrens future to secure 0.25% increase in what?

  • Comment number 13.

    #7

    If you look at this
    https://www.fool.co.uk/credit-cards/new-purchases.aspx
    and this
    https://www.tescofinance.com/personal/finance/finance/creditcards/index.jsp?referrerid=tesco
    there is no reason why anyone need pay any interest on a credit card.

    I am sure there are lots of people playing this to good effect transferring balances and making purchases and paying next to nothing in interest.
    In fact if you had an offset mortgage you could use this trick to very good effect.

    Yrs

    Mrs Bloggs

  • Comment number 14.

    I think the Public have decided to Follow our Spendaholic Prime Minister and simply borrow, borrow, borrow to spend, spend, spend !

    Can you blame them

  • Comment number 15.

    The Tesco results just show that people like to/need to eat and that they are ready to pump up the debt on their credit cards.

    Remind you of anything?

    But never mind, Gordon is back from saving the World and is now ready to lead us out of the recession.

    Again, we are saved!

  • Comment number 16.

    6. At 10:28am on 12 Jan 2010, onward-ho wrote:
    Told ya!


    Your optimism in previous posts is a little unusual. Particularly when the following was announced this week:

    Up to 1m people have borrowed money on their credit card to pay their mortgage or rent over the past year.

    This is according to research done by the housing charity Shelter who calculate 6% of UK homes are affected.

    They believe it is people in lower social groups who are most likely to need to use their credit cards, but that the middle classes have also been affected.

    Surely you’re not an ‘I’m alright Jack' type.


  • Comment number 17.

    #13 - firstly I am not sure if you are agreeing with me or simply referencing my point to make a further similar point.

    These 0% deals on balance transfers do carry a charge for the balance transferred - typically 2 or 3% so they are not free.

    Where it is new credit with 0% interest for x months this is just a horrible debt trap that the general public fall into - fine for the x months and horrendous in x+1 months - of course they can try and transfer to a new 0% deal and pay the 2 or 3% trf fee (and then run up even more spending they can't afford) but ultimately what happens is that they become a bad credit risk and the nobody will accept the transfer due to size.

    As I said in #7 - there is a debt disaster heading our way.

    If your comment was specifically re the paying of mortgages with credit cards then I think this would count not as a purchase but as a cash transaction and hence interest would be payable from date of payment - I may be wrong on this point and would be interested if you know for sure differently.

  • Comment number 18.

    #14 Grumpybob

    "I think the Public have decided to Follow our Spendaholic Prime Minister and simply borrow, borrow, borrow to spend, spend, spend !"

    And why not?
    Interest rates are incredibly low, the pound itself is becoming less valuable day by day. It makes sense, borrow money now because tomorrow that loan won't be half as much in real terms. Buy that house on masses of debt - nobody would ever let the housing market really readjust. May as well just keep consuming eh?

    It's those of us who were prudent, saved money and stayed out of the overinflated housing market that are the real fools.

  • Comment number 19.

    All I can say is that the debt is not evenly distributed.

    I can find no one in our close circle of family and friends that has a significant amount of debt, indeed most have significant savings and are cautious in their spending.

    Now if the debt is not fairly even distributed then some people must have a huge debt and will quickly start to suffer if anything such as employment or interest rates change.

    So are they all going to default and be declaired bankrupt? That would have a major impact and I can not see what anyone can do about it as they must be so far in debt that there is no real prospect of getting out of it.

    Sadly the impact of the profligate few will be felt by all.

  • Comment number 20.

    Yes indeed the recession might be over, but the debt question..hmm.
    Unlike Tesco or Sainsbury, where you as the customer carry a certain weight when making complaints, as well as having access to management staff and Trading Standards, there is very little one can do about your financial position, especially when the Banks make it more difficult for you.
    For you as an individual, you cannot re-negotiate your debt, ask for an "interest holiday" - not unless you are wealthy businessman, investor or banker yourself. So it begs the question.
    Are the banks and bankers themselves making you poorer through their own activities and in a way, have some been manipulated into debt through the Banks own marketing skills and pressure selling?
    There is a regulator, the FSA, but joe public are not allowed to ask them to investigate wrong doings by the banks, so all sorts of fraud could be taking place - we will never be allowed to know - and its you the customer who has to prove otherwise. Should we allow the banks to pay themselves bonuses? To manipulate accounting practice and report a profit one year and a loss another? We can't stop them, anymore than anyone can stop Tesco or Sainsbury issuing a dividend on profits.
    All we can do is pressure our scared politicians, who need the support of the banks, into pressurising bankers to be accountable, to change accounting law and practice and to force bank management to help or meet the concerns of customers or withdraw their permits to operate as Banks in the UK. As they say, pork might fly!

  • Comment number 21.

    Robert,
    The arguement is simple.....people have to eat.
    Tescos is probably the most convenient, and the best-priced store to buy goods. It is a simple equation.
    My feeling is that if the economy does not recover in 2010, the next 'boom' market will be garden-centres. As the spring comes people will start buying seeds and growing their own food.
    How is that for an austerity package!

  • Comment number 22.

    Recession ending?

    Where have I heard that before?

    Maybe it was this time last year perhaps?

    What significance does the Tesco result have? "People eat food during recession - shock"

    What about the Marks and Spencer result? "The middle classes continue to shop despite the downturn - shock"

    Both these companies are large corporations and are much less likely to have difficulty during this crisis. Maybe a report on the thousands of corner shops and small enterprises which are disappearing at an alarming rate would have been more appropriate.

    You cannot tell the roughness of the sea by simply looking at the gigantic ferries and oil tankers. All may seem calm to them but the small yachts and dinghy's are being tossed around like socks in a washing machine.

    ....and yet this is what the media - oh and of course the Economists - love to concentrate on. Unfortunately it does not give the full and clear picture to all sailors.

    Are we out of recession then? Technically Robert says we are.

    Technically a depression is debated as being a decline of GDP of 10% or a recession that lasts 2 years.

    I believe the recession started in Q2 2008 - so only 2 more quarters and we're "technically" in a depression.

    Funny that the media have not been mentioning this - what will we see next? A surprise upgrade to the GDP figures for a month just to break the stigma of depression?

    Do not be surprised as the Government does everything in it's power to prevent the R word turning into a D word.

    It's got no room to tinker interest rates - so it will be back to printing machine if we're not out by the end of this quarter.

  • Comment number 23.

    #18 'And why not?
    Interest rates are incredibly low, the pound itself is becoming less valuable day by day. It makes sense, borrow money now because tomorrow that loan won't be half as much in real terms. Buy that house on masses of debt - nobody would ever let the housing market really readjust. May as well just keep consuming eh?

    It's those of us who were prudent, saved money and stayed out of the overinflated housing market that are the real fools.'

    Simplistically this is true but having debts hanging over you that you can't pay must be stressful and affect your general life/health in a negative way. I'd rather have my simple life and no debts thank you very much - as I said yesterday to much poo pooing from other bloggers a fast car and a big house are overrated, its the simple pleasues that count.

  • Comment number 24.

    #17 Grimupnorth

    I certainly do agree with you. If i may, i would also add that cash advances are generally at a penal rate of interest c 30% while base rates are of course at 0.5% and generally the higher rate interest advances are the last to be paid off.

    There are no clever tricks to be done with credit cards or even ofset mortgages from the consumers point of view, the purpose of promotions is to hook the consumer into more and more debt.

    The only other point i would have on Christmas spending on credit cards is, from a former retailer, this has been the case for at least 10 years, Jan to March turnover declines as debts are (part) paid back

  • Comment number 25.



    It's very hard to get excited about these figures. The "spend now pay later" approach to Christmas is well established and, as other posters have pointed out, there are few incentives for people to save and we don't know how much of this spensding was "on credit".

    Also the weaker figures for M&S and Debenhams suggest that people are trading down and perhaps spending more on food than on gifts?

    This will doubtless prompt a statistical exit from recession: but it could as easily be, "eat drink and be merry - for tomorrow we die."

  • Comment number 26.

    Robert, I'm disappointed at your shallow take on these figures.

    The government is borrowing £15 to £20 billion every month. A large slice of this is to pay unemployment benefits.

    Now, tell me where does a large proportion of an unemployed person's benefit get spent? On the weekly trip to Tesco?

    So the real news is.... taxpayers increase Tesco sales. Yes, my future taxes (to pay back government debt) are in a large part being spent today in Tesco.

  • Comment number 27.

    16. At 11:22am on 12 Jan 2010, Dempster wrote:

    6. At 10:28am on 12 Jan 2010, onward-ho wrote:
    Told ya!

    Your optimism in previous posts is a little unusual. Particularly when the following was announced this week:

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Good point Dempster

    See previous post below...

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    56. At 2:05pm on 11 Jan 2010, nautonier wrote:

    49. At 1:54pm on 11 Jan 2010, writingsonthewall wrote:
    33. At 1:24pm on 11 Jan 2010, Bob wrote:

    "#4. onward-ho wrote:

    "Who's the victim?"

    Are you serious?!"

    It's well known that as a supporter of the City onward-ho will not see the victims until he is having to step over the dead ones on the way to his work
    >>>>>>>>>>>>>>>>>>>>>

    'Supporter of the City' or 'paid by the city' (i.e. and/or in receipt of government contract money for 'general spin', advertising, media or other government contract) or similar tax payer funded concern?

    I wonder which one(s) it is?

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    About 20% of the UK population are actually better off at the moment, even after 13 years of New Labour and no doubt some of this segment of the population are creaming in the UK public debt money as public sector paid government contract 'income' - and I'm not talking about Giro, benefits and JSA handouts etc.

    So I wonder which one it is for Onward-Ho?

    Is it spending public debt money for Gordo that makes Onward-Ho so optimistic - I think that can take 'I'm allright Jack' to a new level?

    Which one is it (if any) - Paid by the City and/or Gordo Debt public sector contract money?

  • Comment number 28.

    A case of "Eat, drink and be merry for tomorrow we die"?

  • Comment number 29.

    The economy has been in recession - OK
    ..but the effects of that recession have been reduced by continued government spending and fiscal policy changes (like VAT)
    But, eventually the stimulus package are not affordable (deficit in excess of 10%) and it will have to be stopped
    That is when we will either see a second recession as spending power will be drawn out of the economy through taxes and spending reductions
    It feels to me like pain deferred - unless the economy naturally starts to wing upwards again (GB's assertion about boom and bust was just wrong)
    Politicians are arguing about when to withdraw the stimulus and cut spending - we're the poor sods that we take the brunt whenever it happens - and at that point I think the shops will see falls - and sharp ones at that

  • Comment number 30.

    "So are they all going to default and be declaired bankrupt? That would have a major impact and I can not see what anyone can do about it as they must be so far in debt that there is no real prospect of getting out of it."

    That is of course what will happen. The treasury no doubt realises that most of the record personal debt the country has cannot and will not be repaid. How much damage would it do to our retail based economy if everyone was to stop spending and save an amount equivalent to more than our GDP? How long would that actually take?

    The only solution that allows the banks to not look like bigger chumps by having £1 trillion of defaults on their books is massive inflation. Conviently this also means that the housing market can be allowed to re-adjust without prices actually falling and that a bunch of government debt suddenly gets a lot cheaper. Of course internationally we'll be boned, but as the US will be doing the same thing at the same time no one will really notice.

  • Comment number 31.

    #17

    I was merely making the point that it is quite possible to use a credit cards and pay very little. You could do this to make big or small purchases and spread the cost.

    For example, you could buy an annual season ticket on a nice new M&S or Tesco credit card and spread the cost over 12 months. You could have made a down payment on a scrappage funded car or a new kitchen or perhaps an HD ready TV. You could have helped pay for xmas expenses. You could do this repetitively year after year with a new card.

    I'm not saying that lots of people don't get into trouble. I overhead a conversation on the train the other day about a woman that had run up hideous credit card debts, remortgaged to pay this debt off and was back to square one having spent liberally on designer must haves and electronic gadgets for the kids. (Yes this was relayed in entirety). I know there are people paying for basics.

    What strikes me is this however. When I was a kid back in 1962/63 we didn't have central heating or an automatic washing machine or tumbledryer or two cars or a colour TV, PC, iphone blah blah blah. Most of my friends families didn't have a car. Lots of people didn't have refridgerators, phones or even black and white tellies and the never never was dodgy. Governments didn't go round telling us that x% of families or kids lived in poverty. Kids played in the streets and fields and mum's were at home to put food on the table. Ok, not mango or tomatoes in winter. At the same time it was a white anglo saxon male world here in the 'first world'

    Everyone's expectations have changed. There is culture of entitlement. Whether we are male female hindu, muslim, christian, black, white, asian, fundamentalist agnostic, gay, straight, disabled, able to sit at a desk or with ADHD people expect something that their parents and grandparents didn't and we expect to have it now whether its drawerfuls of T-shirts, handbags, shoes or just to be warm and credit cards are one way some meet this need and there is a way to limit the cost.

    We could go back, I suppose but that would put a huge hole in the governments spending plans and Tescos might not like it. Good for greenhouse gas emissions though, if you are into that sort of thing ;-)

  • Comment number 32.

    #23. GRIMUPNORTH77 wrote:

    "...having debts hanging over you that you can't pay must be stressful and affect your general life/health in a negative way. I'd rather have my simple life and no debts thank you very much - as I said yesterday to much poo pooing from other bloggers a fast car and a big house are overrated, its the simple pleasues that count."

    But there is a middle way between having no debts and having unmanageable debts. Isn't there?

  • Comment number 33.

    #26. jonearle wrote:

    "The government is borrowing £15 to £20 billion every month. A large slice of this is to pay unemployment benefits.

    So the real news is.... taxpayers increase Tesco sales."

    That's nonsense. Anyone in receipt of unemployment benefit would undoubtedly be spending even more in Tesco (and elsewhere) if they were in work.

  • Comment number 34.

    Mrs Bloggs - we should go back, we have lost our way.

    It is possible that we may go back any how because Asia is taking over and somebody needs to get poorer to balance the scales (and there are a lot of Chinese on the other side of the scales!!)- fortunately the Americans will be on our side of the scales with us.

    The other darker possibility is that the US don't like being poor and we get something terrible like a nuclear holocaust - I guess if that happened the survivors won't have drawerfuls of T-shirts, handbags or much at all.

  • Comment number 35.

    28. At 12:13pm on 12 Jan 2010, zygote wrote:
    A case of "Eat, drink and be merry for tomorrow we die"?

    I would definitely steer clear of the pasta & chicken lunch boxes

  • Comment number 36.

    Without prejudice, it would suggest that Tesco's numbers are probably cooked.

  • Comment number 37.

    Following up my comment #26.

    Very rough figures, but accurate enough to prove the point...

    - 600,000 out of work over a year
    - £55 a week spent in supermarkets
    - 30% Tesco market share
    - 52 weeks in a year

    = £500 Million spent in Tesco PURELY from money the government is borrowing, that we will all pay back in future taxes. And that is just using numbers for the 600,000 that have been unemployed over a year. That is a fair slice of the £6 billion spent in Tesco in a year.


  • Comment number 38.

    #30. Nick wrote:

    "The treasury no doubt realises that most of the record personal debt the country has cannot and will not be repaid."

    I disagree. Most of the personal debt in this country will be repaid, as it always is. There will, of course, be many who are unable to repay the debt they have accumulated and will be forced into selling their home or declaring bankruptcy, and every one of those cases will be a personal tragedy, but they are a tiny minority.

  • Comment number 39.

    There is a big opportunity for the unemployed to be given food stamps to 'purchase' discounted foodstuffs which have been produced in the UK using mainly UK unemployed Labour.

    This would be green and could potentially shift about 1/2 million off the dole ques and quickly. Potentially more jobs if the unemployed more involved in the processing and export of produce.

    The key point is that the goods produced with unemployed labour should not be sold by the supermarket giants and instead sold/distributed by local shops delaing directly with local farmers. The scheme can be extended so as to include distribution to OAP's and should include bread made from different seed systems.

    The by products can be used to make oil and other green products and the farms be used to research new crops, energy systems etc.

    Its not rocket science...its common sense - the thing that isn't taught at school or college and which is alien to our MP's.

    We can buzz or we can stagnate! Stagnate or buzz!

    No sorry - I'm wrong - a million jobs in two years - the UK's greatest ever project - just do it!

  • Comment number 40.

    #32 - of course but its a fine line and a slippery slope. Most home owners require a mortgage which is a form of credit. A lot of car owners buy on credit (although I always have bought the standard of car I could afford to buy with my savings - I worked for two years before I had a car). Using your credit card and then paying off by the due date is also okay.

    Once you can't pay a credit card bill by the due date then you should put your credit card in a locked drawer and not take it out until you have rectified the situation.

    But many many people have umpteen credit cards and once they've 'maxed out' on one they get another etc - it would be interested to know a statistical analysis of credit split by the above categories as folows

    Mortgage fully paid up
    Mortgage in arrears
    Car loans - same two categories
    Credit cards - last month due
    Credit cards - overdue

    This last category could be split down further to show number of credit cards held.

    I think this would add a lot of information into what is a very unclear picture because there are so many different types of credit.

    For example we are bound to be more in credit numerically than we have ever been before due to the increases in value of property.

  • Comment number 41.

    " interest rates will one day increase (oh yes) "

    Hmm. I would be very skeptical about this happening in any reasonable timeframe.

  • Comment number 42.

    34. At 12:37pm on 12 Jan 2010, GRIMUPNORTH77 wrote:
    I guess if that happened the survivors won't have drawerfuls of T-shirts, handbags or much at all.

    On a totally unrelated point. I heard Max Beesley (actor) from 'The Survivors' being interview by Richard Bacon on Radio 5 live. His interview was being wound up because 'Call me Dave' was the next guest.
    Richard asked Max "Do you have any points you want to make to Dave?"

    Max said :2 things. First spend more on the NHS, Second Don't put the ta rate up to 50% or else me and a 100 of my mates are off"

    Thanks Max Useful !

  • Comment number 43.

    #33 That's nonsense. Anyone in receipt of unemployment benefit would undoubtedly be spending even more in Tesco (and elsewhere) if they were in work.

    My point is that our future taxes are in a large part contributing to the current Tesco sales figures. Clearly Tesco would have done even better if more people were in work.

  • Comment number 44.

    Turnover is vanity - profits are sanity!
    So Tesco has shown good growth but what about Profit?
    Double clubcard points, vouchers posted early in December, Champagne for £10.
    The headline figures look good but is it profitable and more to the point sustainable?
    Let's also remember it was growth on the back of a comparison to 12 months ago - a very difficult time!

  • Comment number 45.

    10 Kudospeter

    Good comment. In several of my local towns (population 25-30k) 1 in 3 shops has closed, a massive increase on pre-crunch.

    As for Tesco's, they run ever closer to a Monopoly. In Stirling, there are THREE Tescos, £1 in every £2 goes to Tescos, and yet they want to build a FOURTH Tescos!!

  • Comment number 46.

    #37 jonearle

    Sorry but your figures are out. £60bn, not £6bn is tesco's annual revenue. Your calculation of "£500 million spent at tesco as a result of govt spending" to me seems topside but in any event is less than half of Tesco's corporation tax bill alone. On top of this would be PAYE and NI of the shop staff serving customers and the variois taxation on its (UK) suppliers

  • Comment number 47.

    I'm so sick of this ongoing pessimism I could vomit. We are at the end of deeply depressing year and the results are:

    House prices - Up slightly
    Interest rates - Low
    Unemployment - Up significantly but stabilising
    Retail - Resilient
    Manufacturing - Recovering
    Public debt - Up massively
    Private debt - Down slightly

    I'm so sorry that the world has not melted down, all grumpy people on this blog must be awfully disappointed but can we please stop talking ourselves down.

    It's been a hard year but we have come out ok, albeit with some cuts and bruises and knowing there is still a lot more to do. Keep your head down and carry on, inject a bit of optimism and lets spot the opportunities to grow because they abound.

  • Comment number 48.

    "Gentleman, you have come sixty days too late. The depression is over."

    - Herbert Hoover, responding to a delegation
    requesting a public works program
    to help speed the recovery, June 1930

  • Comment number 49.

    #46 Sorry but your figures are out. £60bn, not £6bn is tesco's annual revenue.

    Yes, you are right. But my point is that we are living on borrowed money. The £178 billion budget deficit is of course feeding into the real economy, and massive companies like Tesco who have a 30% market share are undoubtedly receiving a large chunk of money that we as tax payers will be forking out for. So of course we should be expecting Tesco to do well. The £178 billion has to have gone somewhere!

  • Comment number 50.

    hello mr peston

    you recently wrote, in an article 'why do we trust the financial priests' that the banking crisis 'wasnt the fault of ordinary citizens' surely us joes and josephines have to accept some responsibility for helping to build a debt mountain.
    thanks

  • Comment number 51.

    #49 jonearle

    Fair point

  • Comment number 52.

    #19. Are you describing the US mortgage market in late 06? And so it all began.

  • Comment number 53.

    Tesco prove that even in a recession people need to eat.

    This is a non story - the non-essential economy is wrecked.

  • Comment number 54.

    27 nautonier
    Nothing to do with the City, sorry to disappoint you.
    I am not a lobbyist,nor a politico, but engage in private sector stuff, property stuff, and private, small scale public sector stuff and public sector stuff and not particularly profitably either ...... commonly held views about massive waste and fatcats etc fly in the face of my experience that for a lot of contracts the government get a blooming bargain.
    Not smart enough to make much cash out of other's efforts.
    And relatives and friends in the know in all sectors and various continents.
    And a memory of the cyclicality ....? cyclicity?..... of economics.
    Recent and frequent dabbles and career changes, the prospect of unemplowment pre-Crunch, and recently avoided bankruptcy .
    I've been a credit-crunchie and now I'm looking forward to being a
    Post-Crunchie.
    Keep your ears and eyes open and you will see and find out huge things are happening before others realise it .....it is fun!

  • Comment number 55.

    If the depression is over why do 'we' have?
    - 8 million on benefits?
    - £1.2 trillion sovereign debt and rising
    - Balance of payments deficit?
    - sleeping economy due to suck in the most expensive energy and other imports the world has ever seen
    - A manufacturing sector that cannot respond with the lowest interest rates on record
    - Millions of British students to be denied university/college places
    - rising long term unemployment
    - Billions spent on an education system that still produces a significant minority that can barely read or write (or even spell correctly on a blog - that's me - dumbo!)
    - A nasty series of wars threatening everything we do as a nation
    - Public finance spin propped by the largest government media QE campaign in history
    - A creaking public and private infrastructure that is likely to fall seriously unfit for purpose in the next 5-15 years requiring massive investment and with UK population growth out of control which will exacerbate the conditions and as largely ignored by the governments own PBR calculations. Add another trillion pounds or so in essential spending required in the next 15 years?
    - A working population unable to sustain the government spending machine with a massive tax spend deficit
    - An economy massively dependent on imports of critical resources including food, energy and raw materials
    - A weak justice system that rewards criminals
    - Open 'sewer' borders for infiltration by every kind of nasty and drug(s) people traders
    - An unaccountable political elite and a nation that has lost its sovereignty and is mired with bureaucracy, regulations, red tape and restrictions and an outmoded tax and financial system
    - and the rest
    Perhaps I'm making all of this up or some cautious optimism about avoiding another disaster or series of disasters might be more rational as the wreckage tells its own story as we have a myriad of deficit situations here - and some ignored or even unknown to government.

  • Comment number 56.

    54. At 1:46pm on 12 Jan 2010, onward-ho wrote:

    27 nautonier
    Nothing to do with the City, sorry to disappoint you.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Proves my point - you're getting work off the 'public sector' - thought so!

    If the government's getting value for money on your projects then that's a first!

  • Comment number 57.

    48. Elduderino01:

    '"Gentleman, you have come sixty days too late. The depression is over."

    - Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930'

    Very apt. I find it incredible that people think this is over:

    * The greatest financial crisis in 100 years
    * The worst global recession since we blew everything up at great expenses in the Second World War
    * Previous members of the BoE monetary committee predicting the collapse of the American economy within 2-5 years max and the end of the dollar as reserve currency.
    * The west's wealth (read "investment capital") heading east to the new centre of industrial might.
    * Massive public debt with an outcome anywhere between hyper-inflation and depressionary deflation due to unprecedented and unproven QE monetary expansion.
    * Massive deflation if QE doesn't work - as with Japan whose economy was much much stronger than ours to begin with.
    * Enormous spending cuts and further monetary contraction whether QE works or not
    * The threat of gilts strike and associated high interest to counter it - with all that means to a weak economy with overpriced housing market
    * The continued threat to banks due to the continued collapse of the US housing market and the commercial market which is jsut begining to unwind.

    So all these problems have just evaporated due to Tesco's selling a bit more booze at Christmas? And only a 10% drop in house prices and 300,000 extra on the dole.

    If you believe that then the Tories must have really screwed up in the 80's cos they had it far worse - or Gordon is, in fact, some kind of financial genius...


    Alternatively, an objective view of any graph of any slump - whether it is the Crash of '29 or the '80's housing market - will show a dip, a bear market recovery then the real crash. My money is not on Hoover.

  • Comment number 58.

    But this is sales and not profit. Considering that Tescos appear to have taken over every small shop within my town in the past two years - there are now 2 big stores, one city centre store and at least 4 Tesco Metros, I am not surprised that sales have gone up. I am spending more in Tesco only because I don't have any other choice for day to day stuff.

    What will be interesting will be their profits as they must have massive shop takeover and fit-out costs

  • Comment number 59.

    "I disagree. Most of the personal debt in this country will be repaid, as it always is. There will, of course, be many who are unable to repay the debt they have accumulated and will be forced into selling their home or declaring bankruptcy, and every one of those cases will be a personal tragedy, but they are a tiny minority."

    The figures do not agree. The reason we have constantly rising debt is because it's not always repaid. The average debt is per adult is apparently currently £30k. The average salary is £22k (and not every adult works). It will take a long long time for the "average" person to repay what they owe. Selling their houses will not work in many cases as any house bought in the last 6 years is now worth less than the mortgage and any sudden spike in availability will probably cause an even sharper drop in prices.

    We will see a continuation of the current government borrowing and near-zero interest rates until the election (assuming it can hold it that long) as the government still hopes to be re-elected. After that though all bets are off, whoever wins.

    As the government is forced to stop borrowing and spending they will start saving by cutting public sector jobs (currently 27% of the UK workforce) and freezing salaries with a knock on effect on public services. The Treasury/BoE is gambling that the perception will be that the economy has picked up by then and the private sector will be able to take up the slack at this point and the excess staff will be quickly re-employed.

    The same gamble is being taken in all western economies: that the delay in effecting public cuts and the spending on economic stimulation will be long enough and vigorous enough for the private sector to take up the slack and counter several years of public sector austerity without a noticeable change in most people's standard of living.

    This is a gamble though. They can't possibly know the outcome and any miscalculation is likely to fall victim to positive feedback and severe consequences, eg: Too many unemployed => too many houses on the market => big price drops => more people in negative equity => more bankruptcies => more debt written off => less banking profits => less tax income for the government => more spending cuts => more unemployed.

    Or more directly: Too many unemployed => less private sector profit => less tax income => more cuts => more unemployed.

    There are many many ways it can go wrong and only a couple it can go right. If the gamble fails the only way to rescue anything is to make debt much cheaper. And the only way to do that is to allow inflation to run wild.

  • Comment number 60.

    58. At 2:19pm on 12 Jan 2010, smallgraycat wrote:

    But this is sales and not profit. Considering that Tescos appear to have taken over every small shop within my town in the past two years -

    >>>>>>>>>>>>

    Eliminating any/the competition!

  • Comment number 61.

    I am not a Tesco shopper - I tend to flit between Aldi & Sainsburys'.

    I actually spent a lot less on food at Christmas, compared to previous years, as I did not purchase a trolley full of goodies at M & S. I did not cut back on the usual food treats either. Having said that, we did not go out for any meals over the holiday period and we only purchased token presents for each other. Generally, I thought there were a lot of good offers in the supermarkets in the weeks leading up to Christmas & I stocked up my freezer with a variety of meat joints & other cuts of meat, hence I will not need to purchase so much in the coming months.

    I would be interested to know if other bloggers made cut backs over the festive period and if so, in what areas.

    Not sure about last year, but in previous years, the small Tesco Express stores, also opened on Christmas day - that must boost turnover a bit.

  • Comment number 62.

    8. At 10:35am on 12 Jan 2010, rvaucbns wrote:

    "6. At 10:28am on 12 Jan 2010, onward-ho wrote:
    Told ya!

    Yes you did. Why oh why did we not listen ?"

    Told us what? The recession is over?

    Take a look out the window - it's not even begun yet.....

    It never ceases to amaze me how people will cling on to the threads of hope for fear of looking into the dark place.

    Only fictional monsters go away when you close your eyes - real ones based on real facts are still there when you re-open them.

    Still - I suppose when reality is so obscure - maybe ignoring it is the only way some people will get through it.

  • Comment number 63.

    13. At 11:11am on 12 Jan 2010, mrsbloggs13c2

    Oh Mrs B, if only it were that simple.

    On balance transfers there is a 3% fee attached, so if you transfer your balance (and it's only 9 months remember) you are paying the equivalent of an annual interest rate of 4% on balance transfers.

    Most people on existing rates should be paying around this in interest on their mortgage at the moment.

    It's back to the old trick of making finance so unneccesarily complicated that many people get caught out - the art of every con.

    Credit cards used to offer balance transfers for free, and then they worked out what people were doing - so rather than withdraw it alltogether they just made it look like it was the same deal (when it wasn't).

    Also the 0% purchase cards are worthwhile (I make good use of them) - but even though I have an exempelary credit score - strangely even I find difficulty in getting approved. I suspect this is because the CC companies see I have had 14 cards in 7 years and realise I am a 'rate tart'.
    The caveat that financial companies do not have explain why they rejected you prevent you from finding out and taking them to court for discriminatory practices.

    You see, the law, the Government and the world of finance all collude to ensure there are no ways out of financial slavery.

  • Comment number 64.

    17. At 11:27am on 12 Jan 2010, GRIMUPNORTH77

    Apologies - I didn't see this response already - it's good to know great minds think alike though!

  • Comment number 65.

    27. At 12:09pm on 12 Jan 2010, nautonier wrote:

    "Which one is it (if any) - Paid by the City and/or Gordo Debt public sector contract money?"

    .....how about someone who is unable to face the truth because reality might destroy the psyche?

  • Comment number 66.

    47. At 1:03pm on 12 Jan 2010, Cameron wrote:

    "I'm so sorry that the world has not melted down, all grumpy people on this blog must be awfully disappointed but can we please stop talking ourselves down. "

    I understand your desire for optimism (no really) - but if you had a terminal disease would you prefer to not be told, or be informed so you can plan out your last few years?

    This is what the reality is, the Government have taken action so you don't realise how bad it all is - all the positives you listed are based on Government stimuli and cannot be sustained.

  • Comment number 67.

    54. At 1:46pm on 12 Jan 2010, onward-ho

    What nonesense.

  • Comment number 68.

    #59 Nick

    Very interesting comment and I think pretty accurate.

    Couple of things come to mind.

    Public sector employees will find the private sector a little unsettling even assuming the private sector wants to employee anybody.

    Personally I'll be avoiding taking on any staff or debt unless there's a cast iron case for it. It's much easier and cheaper to develop software to do the job instead. The increasing role of technology also means less demand for staff even at low skill levels (e.g. automated checkouts in supermarkets).

    Two world wars sadly removed a huge number of people from the potential workforce. Now we have record numbers of people and a declining need for workers due to technology in all its manifestations.

    Inflation is clearly the way they want to go but unless wages inflate at the same time (which seems unlikely in the extreme) I can't see how this can work.


  • Comment number 69.

    Recession - in or out?

    How bad is this?

    Dig out your history books, look up the central bank interest rate and if you can find at any point in history where the central bank has held rates at 0.5% for nearly a year then I will take that as a model for our recovery

    ....don't waste your time, this is history in the making.

    What's going to finish this country off is all the sparkly eyed optimists who buy into property now at historic lows - who will then struggle to make the payments once the bond market turns and the BoE is forced to raise rates following a mix of worries about the UK debt position.

    It's easy to pay a mortgage on a 2.99% over BoE when the BoE rate is 0.5% - but what about when it's 5% - or more likely 8% as it was in the much smaller crisis in 1989.

    For clarity - the numbers (monthly payments) on a 200k mortgage are:-

    BoE rate Monthly payment on a typical 2.99% above BoE

    0.5 £581
    5 £1331
    8 £1831

    That event is what will turn RBS_temp's "tiny minority" into a large and damaging minority.


    ....but don't listen to me, listen to those who have been telling you we have been 'coming out of recession' since December 2008....

    I understand the BBC have commissioned a survey in which the majority of people believe we're coming out of recession.
    This is now going to be presented as 'evidence' by journalists and politicans - but of course it proves nothing.

    Most people think eating carrots makes you see better in the dark - unfortunately this is total rubbish and was in fact a story put out by the RAF in the war to divert German interest in the truth - radar.

    This shows the power of deceit - over 50 years ago this fiction was produced and still it's believed by many today.

    ....and you're telling me there's no way this whole Economy is one big scam? - no Governemnt could pull off such an outrageous falsehood - surely?

  • Comment number 70.

    Steve,
    Everything will inflate. As your suppliers put their prices up you will raise yours and your staff will not be far behind in asking for a pay rise when they see the prices in the supermarket rising. In many ways this doesn't have an effect, the numbers just mean different things, except the numbers from last year did mean something at the time. So debts will decrease in value, along with savings and cash in mattresses of course (which is why property and land are traditionally safer stores of wealth).

    It happened before in the 70s (Mr "I bought my first house in 1973 and had to make sacrifices, kids these days don't know how to save" doesn't realise he was actually bailed out by the government) and there's no reason it can't happen again.

  • Comment number 71.

    67 writinggsonthewall
    You should get out more, it has been lovely in the snow !

  • Comment number 72.

    65. At 3:00pm on 12 Jan 2010, writingsonthewall wrote:

    27. At 12:09pm on 12 Jan 2010, nautonier wrote:

    "Which one is it (if any) - Paid by the City and/or Gordo Debt public sector contract money?"

    .....how about someone who is unable to face the truth because reality might destroy the psyche?

    >>>>>>>>>>>>>>>>>>>>>

    Well said!

    We've got a lucky blighter here - a '20 per cent-er' - one of Gordo's lucky 20% who are temporarily 'better off' - but that can change as well!

    If you or I were to be cynical you might think that a dose of 'pro government spin' might help a 20 per-cent-er secure more government 'debt fuelled' contract money?

    Now, I wouldn't think that - Would I?

  • Comment number 73.

    Tesco is a greed driven profit obsessed organization that has been allowed by Government policies to spread the results of its unethical business practices across the face of Britain.This company in search of greed driven market domination has decimated village,town and city centres throughout the country.If end of recession means resurgence of Tesco,I feel nobody ought to be particularly encouraged by it.

  • Comment number 74.

    Cameron, Westward Ho - I'd like to start a small club for the non suicidal, possibly a bit cautiously optimistic, small business owners who have been very poor in the past and seen most of it before and who have accurately predicted housing prices and the major hic-ups in the real economy for the last 20 years.
    Not the snappiest of titles - but would you join?
    I agree with the two of you that there is a limit beyond sensible apprehension, after which everything is seen at the bottom of the risk curve. This is as unrealistic as taking every stat generated at the top of the curve and extending it exponentialy and treating it as Gospel truth. The outcome WILL be between the two. Hey - I like grey, because that's what we usually get. There is only one shade of optic white and one of absolute black, but there's a hell of a lot of grey in between. This isn't economic science - just real life and that's what's still going on out there. This is an econmy (not the Public Sector, on which doom will descend in the later half of the year) much more resilient and better prepared than it was 5, 10 or 15 years ago. I know because I worked or ran/owned businesses in both the 70's, 80's and 90's slumps. The absolute doom scenario will not happen. Uncomfortable (even the Medical translation of that - "this will hurt like hell")is not the same as death. It seems to me that many bloggers are confusing misery for a lot of people (which will happen), with the total collapse of the British economy. That ain't going to happen. The figure to watch for in 2010 is the number of people in employment. Not the number of people getting benefit or listed as un-employed. I'll bet that that figure doesn't move much at all. That's the figure that reflects the size of the real economy. Just look at the number of immigrants from the Baltic States that came to the UK in the last 5 years. 500,000 + ? Most have gone home as EC infrastructure projects boost employment at home and opportunities decrease here. That's why the unemployment figures are seen as odd - nobody keeps the stats for EC migration properly (when they leave) and we have solved a major problem, without knowing it and without actually doing anything. They simply went home. It's not just the Financial Services sector that's had the froth knocked of the top, other services and manufacturing (where I work)have been hit by about 20% reductions in turnover as well, but we took a lot of the hits - headcounts etc - in 2008 and have actually adjusted far less in 2009. We're still here, if pretty broke. I shall be recruiting by April this year.
    There has been negative comment on the blog that Tesco's figures are "only" turnover - you wait, the profit figures will be not just excellent, but enormous. People that made the comment simply don't know how supermarket retailing works.
    Nick -post 59- your statement that "any home bought in the last 6 years is worth less than the mortgage" is so up the wall that I felt the need to comment. Check the Land Reg figures for any region over the last three years and you'll find your statement is wrong. That's without allowing for the deposits paid. Go back 6 years and you're wrong by about 30 to 40%. Nationwide's last set of figures (December) show that UK house prices are now within 10% of 2007's peak. IE about 12% off the bottom and continue to climb at a rate to be expected for December - one of the deadest months of the year for property transactions. I expect London and South East prices to have fully recovered by the end of the year and the rest of the country (as is usual) to lag by around 6 to 8 months. If you would like a further explanation as to why UK domestic property prices appear to have a life of their own, have a look at a wide ranging discussion on Stephanie' current blog.
    WH and Cameron - perhaps the Grey Club?
    TM StH

  • Comment number 75.

    jonearle wrote:
    "- 600,000 out of work over a year
    - £55 a week spent in supermarkets"


    You must have some very wealthy unemployed people living by you mate, a lot of the people who live around here are doing most of their shopping in LIDL, ALDI and NETO and I'm including many working people in this too.

    I recently asked one of my neighbours how she's coping since being made unemployed when her company closed down last year and her answer was that she isn't, even though she's currently claiming all of the benefits that she's entitled to once she's paid her utility bills and bought all of the essentials her children need for school she's left with about £40 a week to buy food with and even admitted that without the vegetables that some of the neighbours give to her from their greenhouses and allotments she wouldn't be able to feed herself properly at all.

    I'm sure there are plenty of unemployed people who are working the system and are able to spend as much as they want but most of the people I know who are currently unemployed would never dream of shopping at Tesco's as they simply couldn't afford to.

    And while Tesco's may be doing everything they can to take over retail spaces in the suburbs they tend to keep well away from areas of real deprivation and so make themselves an unsuitable choice for many unemployed people because they don't drive and are unable to get to their stores. A friend of mine lives in such an area and the only shops there are an off-license, a betting shop & two takeaways so he's able to buy alcohol and place bets whenever he wants but he has to take two buses to be able to buy fresh fruit, veg and meat from a supermarket and the closest supermarkets to him are also ALDI and LIDL.

    I'd therefore have to say that I'm a little sceptical about the idea of all of this extra government money being spent in Tesco's via the benefits system. I'd say it's far more likely that people who are in receipt of benefits would be much more likely to spend their money in the lower-end supermarkets such as LIDL or in places like Home & Bargain, B&M & Wilkinsons as Tesco's just aren't as cheap as many people think they are.

  • Comment number 76.

    Dont believe the hype, tesco gave out millions in vouchers just before christmas, I confidence trick on a grand scale bo doubt.

    Post 1, yes interet rates will rise one day, hope you can wait 5 years.

  • Comment number 77.

    74. At 4:13pm on 12 Jan 2010, remoteislander wrote
    There has been negative comment on the blog that Tesco's figures are "only" turnover - you wait, the profit figures will be not just excellent, but enormous. People that made the comment simply don't know how supermarket retailing works.

    It wasn't really a negative comment as such, but pointing out that Tesco have expanded so much over the past 12 months that for many people they don't have any other real option for their shopping. There are 4 Tesco stores within 3 miles of me, two within walking distance, my nearest other store of that type is over 5 miles away and I am sure that this growth in number of shops is what has added to their sales rather than people spending more on food etc.

    Regarding profit, they have taken over so many shops all of which have had to be outfitted and set up that there must be a hugh cost for that. If they are still making excellent profits after all this expansion, then we must really be overpaying for our food or they are taking advantage of their suppliers as news reports and other people have said.

  • Comment number 78.

    #63

    Dear wotw

    Yes, you are correct, the balance transfers would be at about 4% if it were 3% on transfer and 0% for 9 months but this would be better than the 16% you might pay if you didn't transfer the balance at the end of the 0% rate period, wouldn't it and why would you not do this if you had a balance.

    You describe yourself as a 'rate tart'. You and hordes of others and that's why so many people have a wallet full of cards. For one thing, its only 18 months ago that mailshots arrived on doormats across the country every week. If you shop in M&S you will be asked every time you go to the till, even now.

    Maybe, there's a Tesco shopper out there that earned loads of clubcard points buying everything they ever needed over the year on a Tesco 0% credit card and put their money to work in the intervening period.

    I don't think you need to work for an investment bank or be a brain surgeon or rocket scientist to work that out, do you?

    On the subject of Tesco's trading statement, it would be enlightening I'm sure to see what profit Tesco's Personal Finance arm makes especially since it bought out its partner RBS in the summer of 2008.

  • Comment number 79.

    Has anyone taken into account the closure of Woolworths/Zavvi/Littlewood's/Index/Music Zone et al ?

    Surely these stores would have had a combined annual turnover of several billion pounds and Tesco's sell everything that these stores used to sell so isn't it possible that a fair portion of these sales have gone to Tesco's and wouldn't this go some way to explaining their increased turnover ?

    If you reduce the number of companies trading then surely the remaining companies are going to get a bigger share of the overall sales.

  • Comment number 80.

    62. At 2:42pm on 12 Jan 2010, writingsonthewall wrote:
    8. At 10:35am on 12 Jan 2010, rvaucbns wrote:

    "6. At 10:28am on 12 Jan 2010, onward-ho wrote:
    Told ya!

    Yes you did. Why oh why did we not listen ?"

    Told us what? The recession is over?

    Take a look out the window - it's not even begun yet.....


    WOTW Are you suggesting the recession is not over ?

  • Comment number 81.

    Very good posts all round as per. The problem is though that whilst many of you are very clever people who understand the need for slow growth, sensible house prices & a belief that everyone should share in the wealth of the world, there are far too many 'me' people.

    They are the people who will ruin it for all the rest of us average joe's.

    Ask them what they think about QE or the reality of the US dollar losing its reserve status, the list of imperative questions goes on but most people dont know or care, as long as they feel ok now then the future can whistle.

    By having this debt bubble for so long we have allowed a false & unsustainable feel good factor to emerge.

    Most people, including my young self, have never known what hard times are. They have no previous experience to compare it to. They dont read history books etc.

    Mortgage rates could go up by only a few % but that will mean banks will straight away raise theirs to 8%ish, lets see how fun things get from then on.

  • Comment number 82.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 83.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 84.

    80. rvaucbns

    "WOTW Are you suggesting the recession is not over ?"

    I'm with WOTW on this - there is lot more bad news to come.

    "Fitch expects the combined state and federal debt to reach 94pc of GDP next year, up from 57pc at the end of 2007. Federal interest costs will reach 13pc of revenues, meaning that an eighth of all taxes will go to service debt. MOST FISCAL EXPERTS VIEW THIS LEVEL AS DANGEROUSLY CLOSE TO THE POINT OF NO RETURN FOR DEBT DYNAMICS."

    https://www.telegraph.co.uk/finance/economics/6969163/US-must-cut-spending-to-save-AAA-rating-warns-Fitch.html

    "It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.

    "US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."

    "David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

    "The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

    "Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse. "

    https://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6962632/America-slides-deeper-into-depression-as-Wall-Street-revels.html

    It will not be long before it is not just Americans who have to "wake up and smell the coffee."

  • Comment number 85.

    A merket price for bankers?

    But the market price for bankers, these champions of the free market, is not itself a free market, it is rigged.

    The performance of bankers has been dire, yet the market price, the bonuses for performance, have gone up.

    This reflects the fact that we are dealing here with a class cartel, a coterie that pays itself and ensures the high rewards irrespective of social conditions.

    Bankers must 'doublethink', they want a free market for everyone else, but not themselves. This is known wrongly as 'socialism for the rich', but there is little social element in it, merely selfish class interest.

  • Comment number 86.

    77 smallgraycat
    Understand your point, which also rather makes mine. The store opening/ rolling re-furb program that all major retailers run is extremely small beer in comparison to turnover or profit. You can buy an awful load of sheds for £60+Billion. Expansion of square footage also brings ever increasing purchasing and logistical opportunities for cost reductions. Are they cheap - no (see blogs above re Lidl, Netto etc)- Are they screwing their suppliers, for sure. Are their margins better than anybody else's - Absolutely.
    You don't get to be number 1 by being the nicest retailer in the UK - ask WalMart.
    Trust me - the numbers will be exceptional. Doesn't mean that Peston is right in suggesting that Tescos are the best indicator that the economy is moving again, but they will be the retailer that does best under any given set of macro-economic circumstances. Marks and Spencers rather outdated business model (and reduced scale) will mean that they are likely to do the worst. Buy Tesco as a long term hold and sell M&S today.
    TM StH

  • Comment number 87.

    74
    The Grey Club?

    Sounds Grrrrrrreyt!

  • Comment number 88.

    81. At 7:51pm on 12 Jan 2010, sirHellsBells wrote:

    I was going to tell you to get off your high horse, but reading your comment for a second time, it seems somewhat confused.

    You call yourself an average Joe, then have a go at people who don't understand QE or US Dollar exchange rates. Those people are average Joe's too and they are not going to ruin anything for anyone by being ignorant of QE. Let the people who are paid to worry about QE do the worrying. Most people just want to get on in there own life, and maybe, occasionally, have a bit of fun too. You're not on the planet for long so why spend the time worrying if GDP decreased by 0.3% or 0.2%.

    There are plenty of people, on this blog for example, who know a lot about Economics, but what use is that unless you have some form of influence. A world in which everyone was a know-it-all economic blogger would be a very scarey place indeed. It makes me shudder to think about it!!

  • Comment number 89.

    @ remoteislander

    When Morrison's bought Safeway a few years ago it cost them £1.2 million to re-brand and refurbish our local Safeway store, this was a medium sized supermarket.
    This sounds like a lot but as you say, it's small change when put into the context of the £60 billion+ annual turnover of giants such as Tesco.

  • Comment number 90.

    And before I get a barrage of insults, I do find reading this blog entertaining. There is a place in this world for know-it-all economic bloggers, I just disagree with sirHellsBells that everyone needs to be one.

 

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