THE Co-operative Group blasted the government for damaging consumer confidence with talk of an “age of austerity” yesterday, despite revealing an 18 per cent rise in profits.
Britain’s largest mutual retailer said it had beaten tough conditions to grow in the first half of the year but predicted a gloomy trading environment until at least the end of 2011.
Chief executive Peter Marks told City A.M.: “Are we going to be helped by the general economy any time soon? No – how can you be because the government is telling us about an age of austerity.”
Marks said negative language from politicians was “absolutely” affecting sentiment on the high street. He added: “If you talk loudly enough and long enough about something, people start believing it. However, it is clear the government needed to tackle the deficit. Everybody knows we were living beyond our means.”
Marks’ comments are likely to hit home with Prime Minister David Cameron. Earlier this year, Cameron re-launched an initiative urging school and hospital workers to replicate co-operative structures in a bid to improve public services. Chancellor George Osborne has praised mutuals as a way of letting people “take ownership of their own enterprise”.
Marks’ broadside came as the Co-op said its purchase of Somerfield helped push group turnover up eight per cent to £6.9bn in the six months to 3 July. The business, whose activities span food retailing, financial services, travel and funeral parlour operations, said profit before payments to members fell 31 per cent to £169m. But after one-off items it rose 17.6 per cent to £260m.
Co-operative Financial Services, which merged with the Britannia last year, picked up a stream of customers disillusioned with bigger-name banks. Its operating results rose by more than a third to £109.3m and savers’ deposits grew to £1.4bn.