What to watch: UK retail sales post record fall, government borrowing rises, lockdown fears drag stocks, Nissan halts production

Here are some of the top business, market, and economic stories you should be watching today in the UK, Europe, and around the world.

UK retail sales post record fall in 2020

British retail sales suffered their largest annual fall on record last year, with sales barely inching higher in December despite the end of lockdown.

Official data published on Friday showed sales, excluding fuel, grew by just 0.4% in December. Economists had forecast month-on-month growth of 0.8%.

“The recovery in retail sales fell flat in December,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

The tepid rise in sales came despite the end of November’s lockdown on 2 December. Sales had slumped 2.6% in November during the month-long shutdown.

Clothing stores saw sales rebound by 21.5% in December, after a fall of 19.6% in November.

“Despite the monthly recovery, sales in the sector are still 14.2% lower than December 2019 and continue to remain at a lower level than before the pandemic struck,” the ONS said.

UK borrows further £34bn

The ONS also revealed that public sector net borrowing was £34.1bn ($46.5bn) last month, an increase of more than 470% compared to December 2019’s figure.

It marked the highest December on record and the third highest month of borrowing since records began in 1993.

Public finance records have repeatedly tumbled during the COVID-19 crisis. Tax income has fallen while government spending has surged due to targeted support to keep the economy afloat. The government has been forced to borrow eye-watering sums as a result.

The government borrowed £270bn between April and December 2020 and the state’s cash requirements last year were nearly double the previous record total. The Office for Budget Responsibility has said government borrowing could reach almost £400bn by March.

“This substantial increase largely reflects the impact of the pandemic on the public finances, with the furlough schemes alone adding £67.6 billion to borrowing in the financial year-to-December 2020,” the ONS said.

The government spent £10bn on the furlough scheme in December alone, ONS data showed.

Stocks tumble amid fresh lockdown fears

European stocks opened lower on Friday against a backdrop of economic pessimism, including fresh lockdown restrictions on the bloc and in Asia.

The FTSE 100 (^FTSE) fell 0.4%, the DAX (^GDAXI) dropped 0.11%, and the CAC (^FCHI) was down 0.5%.

EU leaders are mulling internal border closures due to rising infection and death rates and various governments are considering extending their lockdown restrictions further in an attempt to curb the spread.

Stocks also suffered due to concerns of fresh COVID-19 restrictions in China and rising cases in Southeast Asia. China reimposed travel controls after outbreaks in Beijing and other cities of a new virus variant that might be more infectious.

On Friday, China reported 103 new infections, the country's 11th day with more than 100 confirmed cases.

Richard Hunter, head of markets at Interactive Investor, said: “Markets have stumbled at the end of a generally directionless week.

“The wave of optimism which had gripped the US markets the previous day, as the inauguration of the new President passed without incident, and as investors took hope from some positive political noises around the stimulus package, subsided.”

WATCH: Nissan commits to Sunderland but freezes production due to COVID

Nissan pauses UK car production

Nissan (7201.T) announced that it is temporarily pausing production at its Sunderland factory but has committed to the region long-term on the back of the trade deal between the UK and EU.

Nissan said in a statement that it would temporarily pause one of its two production lines at its Sunderland factory.

Two shifts will be skipped on Friday on line one, which produces LEAF and Qashqai cars. Line two, which produces Juke cars, will continue as normal.

The temporary pause is due to supply chain issues caused by the COVID-19 pandemic, a spokesperson said. A part needed for the wheels on Qashqai cars has been held up at a port. Production is expected to resume on Monday.

Additional reporting by Oscar Williams-Grut