Scottish Conference Charity Retail Association

1. Scottish Conference Charity Retail Association Economic prospects – in which direction are we heading?

2. Scottish Charity Retail AssociationConference Agenda RECENT HISTORY • How has retail fared during the recession? THE FUTURE • Prospects for economic recovery?

3. RECENT RECESSIONS

5. Periods of recession

7. Total Inflation, Volume, Value growth 1989 - 2011

8. Total Inflation, Volume, Value growth 1989 - 2011

9. Embroidered T-shirt - Price: £4. Cost: Misery Primark is rightly being exposed over the use of child labour in the finishing of cheap clothes. But as evidence against retailers stacks up, shoppers are kidding themselves if they don't shoulder some of the blame, says Dan McDougall. The key question behind sweatshop investigations into major corporations like Panorama’s special on Primark is abundantly clear: do consumers, the UK shoppers who spend billions in the High Street, truly care where their £4 hand-finished blouse comes from? The answer, to the shops at least, is yes. And it is reflected in the growth of ethical sourcing policies led by firms like Marks and Spencer.

10. Total Inflation, Volume, Value growth 1989 - 2011

11. Inflation by product group

12. THE FUTURE

13. Consumer spending has been relatively resilient? • Unemployment has risen, but not as much as expected, nor as much as in past recessions • Historically low interest rates have supported household finance • But these factors are temporary, pointing to a sluggish consumer recovery in 2012….

14. Worries ahead for the UK economy • Stock markets have suffered setbacks recently, concerned about global uncertainties (Libya, Japan etc). • Future tax rises and public sector job cuts will dampen any recovery. There is likely to be little in next weeks budget to change this.

15. House prices recovered in 2010, but are we heading for a double dip?

16. GDP growth – back in recession?

17. Uncertainties reflected in alternative GDP scenarios …

18. alternative inflation scenarios … *High inflation scenario is consistent with strong recovery, while the low inflation scenario is consistent with double dip

19. … and alternative interest rate scenarios

20. Fragile labour market in 2011Unemployment to drift higher + real-terms earnings decline = tough retail environment

21. Sticky inflation to force early interest rate rises?Growing market anxieties about UK inflation look exaggerated (1.7pp of the current 3.7% UK CPI inflation rate stem from VAT and indirect tax hikes) but rates will inevitably nudge upwards later this year.

22. UK economic growthGDP & government expenditure and subdued consumer demand Consumer spending Government spending

23. Key messages on UK economic outlook • A recession & a recovery like any other, but with a subtle difference. This time the recovery will be elongated, as customers’ disposable incomes will be under pressure as never before • House prices and stock markets have recovered significantly since Spring 2009, but sustainability of these recoveries is now being severely tested • Interest rates expected to rise in medium term, but should remain relatively low • Significant tax rises and public spending cuts will continue ( in order to tackle the budget deficit), so it will be a long haul out of recession

24. Strategy on coming out of recession • Continue to invest • Reserves are for a rainy day – but what is the worst recession in living memory if it is not a rainy day!!?

25. Scottish Conference Charity Retail Association "There is a return by consumers to a more intelligent way of shopping, and I think it's clever to shop in charity shops. We've gone through 15 years of really high consumption where fast fashion and very cheap value fashion affected people's shopping habits. Now, with the financial crisis and the environmental crisis, there's a slower way that people are consuming and there's a more sophisticated approach to consumerism. So to me charity shops are like, whoopeedoo!“ Mary Portas, talking to the Scotsman, last year.