If you want to know what’s happening to the British economy, there’s no better place to see than taking a peep into Next’s headquarters in Enderby, Leicestershire.

It’s here the number crunchers collect the sales figures for the UK’s biggest clothing retailer from across 700 stores – 200 of them in Europe – and a booming online business which sells everything from its own fashion to homeware to Victoria’s Secret lingerie.

Not only has Next turned out to be one Britain’s best-run companies, but its trading patterns are proving to be an exceptionally accurate bellwether of how confident shoppers are about what happens next.

Encouraging: Next's trading patterns are proving to be an exceptionally accurate bellwether of how confident shoppers are about what happens next

Encouragement: Next’s trading patterns show how confident shoppers are about the future

And with spiking energy prices, fears of higher interest rates and a fall in living standards, the outlook doesn’t look great.

Indeed, the message from Next’s latest third-quarter update confirms what many experts have been predicting: that after several months of pent-up post-pandemic demand, trading has dulled over the last few weeks.

Next reported a healthy 17% increase in full-price sales from the third quarter to October. However, sales decreased to 14% over the last five week. 

Next chief executive Lord Wolfson is being typically careful, warning that the effects of pent-up demand are likely to ‘diminish’ and that getting stock because of warehousing labour shortages is still causing problems.

What was interesting to see is how online sales have leapt again – they are up nearly 50 per cent on the year – while bricks and mortar sales were down 28 per cent.

It is difficult to break the lockdown routines. Wolfson is still cautious about the Christmas season.

He expects sales will be down but still 10 per cent higher, which is not too bad, all things considered.

The full-year forecast remains the same at an adjusted pre-tax profit of £800million, its highest level since 2016.

Wolfson is unpredictable, but you never know. It’s true he has a habit of keeping expectations low so as not to disappoint: in September the group upped profit forecasts for the fourth time this year, the sixth in two years. But that’s not likely at this stage.

If they are smart, members of the Bank of England’s Monetary Policy Committee will have looked closely at Next’s figures before deciding today whether or not to raise interest rates.

Governor Andrew Bailey, economist Huw Pill, have been raising concerns about a hike being imminent. However, a rise in the price of oil is not a forgone conclusion.

It could be argued that their warnings were effective and prompted mortgage lenders to raise rates.

Yet the nine members of the committee are pretty evenly split, with two particularly dove-ish members – Professor Silvana Tenreyro and Dr Catherine Mann – arguing recently that rate rises now would damage an already fragile economy.

Tenreyro warns the Bank that it is unable to control inflation through raising rates, as the recent jumps in energy prices have global origins and are triggered by disruptions in supply chains.

Actually, any rate increase could lead to recession.

Consumer confidence is at its lowest point since February. It’s no surprise that lockdown savings that people have kept under lock and key are not being used. If I were a betting type, a 6-3 vote in favor would be the most likely outcome.

Even if they do rise, they are unlikely that they will exceed 0.25 per cent.

Get the vote out…

If the controversial £530million takeover of insurer LV, by Bain Capital, goes ahead, the 1m-plus eligible members will be offered £100 each. Yes, £100.

Although the one-off payment would cost LV £111million, it’s a derisory amount. If LV’s bosses thought £100 would be enough of a sweetener for members to accept the offer, then they must be even more desperate than they appear.

They have already requested the courts to modify its articles of incorporation in order to get the takeover through quicker.

At the moment, 75 per cent of at least 50 per cent of members have to approve the takeover.

But LV wants to change the articles so that 75 per cent of a smaller number of members is necessary, which is an outrage.

Only one thing is required now. Those who are against the takeover must take a leaf out of Dominic Cummings’ playbook and get everybody out to vote.

They have until December 10th to create a Vote No campaign. Cummings may even have some spare time.

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