Yesterday there were reports from the retail sector that sales were down a dramatic 3.7% on the previous month. Consumer confidence is obviously down but the announcement of the weak January figures is concerning given that it is the traditional sales month and there is normally a bounce in January. For example, this time last year there was an increase in sales. The retail sector and IBEC have described the figures as "dismal and disappointing". The 2% increase in VAT announced last December by the Government has added considerable pressure to the industry. The 2% increase in one fell swoop was not a demand from the troika and on this side of the House we warned that it could have a damaging impact on the retail sector and the wider domestic economy.
The Government must take action to stimulate the retail sector and the wider domestic economy. The targets set by the Government of a Revenue yield of €670 million will not be met with these sales figures and this puts a significant doubt on the entire budgetary projections. The impact on sales is negative but the wider impact on jobs is serious indeed and cannot be underestimated. The retail sector employs approximately 240,000 people. The Government must take affirmative action to protect these jobs in what is a hard pressed and difficult sector. The Retail Ireland director, Stephen Lynham, has said that the high cost of rents, rates, tax and labour are causing retailers real difficulties and depressing consumer demand. This had the added disadvantage of the broken promise of the Government to ban upward-only rent reviews. It was a severe disappointment to retailers when the Government broke that promise. As the Government broke it, it announced the 2% increase in VAT.
