London leads UK recovery, but large retailers drag on growth

 
Tim Wallace
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THE ECONOMY is growing once more – and London led the recovery in the first quarter, influential survey data showed yesterday.

However, other indicators pointed to weakness in some parts of the UK, with increasing numbers of retailers entering administration in the first three months of the year.

Every English region except the north east registered rising business activity, Lloyds/Markit purchasing managers indices showed.

For the UK as a whole the index rose to 53.3 in March, up from 52 in February and firmly above the “no change” level of 50.

London’s firms boomed in the month, accelerating from 53.5 to 57.1, indicating much more rapid growth in economic activity.

However, data out yesterday from Deloitte showed a 15 per cent rise in retail administrations compared with the first quarter of 2011.

A total of 69 firms fell into administration, up from 60 in the same period of last year, and 10,000 people lost their jobs when major firms like Peacocks and Game failed.

“Whilst the quarterly rent day often sets the timing for the insolvency, a significant trigger in a number of recent administrations is that many retailers have too many marginal stores,” said Deloitte’s Lee Manning. “As online retailing grows whilst overall spending is weak, the fixed costs and poor performance of some stores drags on the business.”

Meanwhile the Centre for Economics and Business Research argued cutting bank holidays could boost the economy as each one costs £2.3bn in lost output, even after counting higher retail spending.