0:00

Eleanor Williams' claims that she'd been

0:02

trafficked by an Asian grooming gang

0:04

led to protests, racist attacks and

0:06

claims of a cover-up. Eventually

0:09

she was jailed for lying.

0:16

I'm Sky News' Jason Farrell

0:18

and in Unreliable Witness we

0:20

ask why did she lie

0:22

and explore unanswered questions with

0:24

new revelations. Follow

0:27

Unreliable Witness wherever you get your

0:29

podcasts. I'm

0:31

Neil Patterson. Welcome to the Sky News Daily,

0:33

where, in a break from the norm, we've

0:36

actually got something positive to report for once.

0:38

We've heard good news. Inflation has

0:40

come down. It's come down as we expected.

0:42

But we have still got some way to

0:45

go, particularly with what I call the more

0:47

persistent bits of inflation. That's

0:49

Governor of the Bank of England Andrew

0:51

Bailey bringing the welcome news that inflation,

0:53

the rate at which goods and services

0:55

increase in price, is down to 3.2%.

0:57

And that is the lowest it's

0:59

been since September 2021, raising

1:02

hopes that soon the Bank of England

1:04

Monetary Policy Committee might start to cut

1:06

the interest rate and give a little

1:09

help to borrowers. And yet, despite

1:11

this good news for the economy, as

1:14

always, it needs tempering with the bad.

1:17

Retail giant ASOS has seen year-on-year sales

1:19

drop by 16%. Beloved

1:21

British brand Superdrive, which went from a

1:23

market stall to global fame, is

1:26

now delisting from the stock exchange as

1:28

it attempts to avoid heading into administration.

1:31

So is the government's economic

1:33

strategy paying off? And

1:35

are they right to take the credit

1:37

for the improving economic outlook? Later,

1:42

we'll be taking a close look at the

1:45

retail sector with Russ Mould from investment platform

1:47

AJ Bell. But let's dig through the numbers

1:49

with our economics and data editor Ed Conway.

1:51

He's taken a break from hassling central bankers

1:53

in London and is instead hassling bankers in

1:55

the United States for a bit of a

1:58

change. So Ed, we'll get to that. We'd

2:00

exactly argue at the moment because clearly it

2:02

is not the office. No, it was not

2:04

my office. It's the office of the International

2:06

Monetary Fund. I'm in the config atrium so

2:08

you can hear people coming and going around

2:10

me. This is, if

2:12

you're talking about the hub of

2:15

international economic tools, it's

2:18

right here. This place was set up. I'm not

2:20

going to do a long lecture about it anymore.

2:22

This place was set up 80 years ago at

2:24

the Bretton Woods Agreement in 1944. Basically,

2:28

it's a place where different finance ministers can

2:30

get together and try and work out what's going on

2:32

in the global economy. The

2:34

interesting thing is that we've obviously

2:37

just had UK inflation numbers out.

2:39

They're down but they're falling less quickly

2:41

than expected. It's kind of

2:44

a similar story in the US as well. So,

2:46

US CPI as well is kind of ticking

2:48

up around the world elsewhere.

2:50

You definitely have this sense that while inflation

2:53

is coming down, while people are tentatively

2:55

a bit relieved here, definitely that's part

2:57

of the message from the International Monetary Fund, there's

3:00

still a bit of nervousness that the

3:02

job's not over. Yes, and inflation has

3:04

not gone away by any means. We've

3:06

inflated, I guess, what central bankers are.

3:09

They're all here, what they're kind of

3:11

nervously talking about. But Ed, allow me

3:13

to be just a little bit parochial

3:15

just for a second and focus on

3:17

the situation in the UK. Andrew

3:20

Bailey, of course, announcing that inflation is coming down.

3:22

But I suppose we should acknowledge the fact that

3:24

whilst it's down from 3.4 to 3.2, there

3:28

was an expectation that it might have come even

3:30

more than that. Yes, there was. I

3:32

think some economists thought 3.1, some thought even 3%.

3:35

So it's a tricky one. It is going down. But

3:39

what matters just as much as the fact that it's

3:41

going down is whether it's going down as fast as

3:43

Pope most people expect it to, because that

3:45

in turn informs the decision from

3:47

the Bank of England about what they're going

3:49

to do with interest rates. So, you know,

3:52

up until recently, I'd say there was a

3:54

decent chance that people thought that there might

3:56

be a rate cut in the May

3:58

meeting. OK, so interest rates... currently

4:00

5.25%. Some people thought that maybe the

4:02

bank, which has already hinted that rate

4:04

cuts are potentially coming, the fact that

4:06

this inflation isn't coming down as quickly

4:09

means that's looking much less likely. And

4:11

a lot of economists think that the

4:13

earliest likely one is potentially August could

4:15

be even later still. So

4:18

that's higher interest rates

4:20

for longer. And right now,

4:22

those interest rates are causing a lot of

4:24

pain. Yeah. And just in terms of the

4:26

reason for inflation coming down, certainly looking through

4:29

the figures, cooling in terms of food

4:31

and drink inflation, we have seen

4:33

a drop in household gas and electricity bills.

4:35

But on the latter, I mean, that remains

4:37

pretty volatile, doesn't it? And if, for example,

4:40

we were to see a bump

4:42

in global oil prices,

4:45

we could start seeing inflation creep back up

4:48

again, couldn't we? Well, yes, yes, that is

4:50

certainly true. It's worth saying that the way

4:52

that obviously, as we all know from the

4:55

last few years, the way that our bills

4:57

behave is they move with a bit

4:59

of a lag. So we've got this price

5:01

cap, essentially, you kind of know in advance

5:04

where they're going to be heading for the following

5:06

quarter and then they might bump up. And

5:08

as a result of that, we

5:10

have a pretty good sense of where inflation is

5:13

likely to head in the next few months. But

5:15

broadly speaking, they do think it's

5:17

going to fall in April and actually fall quite

5:19

a bit. So the annual rate, and we're

5:22

talking about the annual rate at which prices are increasing,

5:25

getting down to around 2%, maybe even below

5:27

2%. And it's been interesting here

5:30

in the US. And it's so fascinating how

5:32

similar the conversations are there than they are

5:34

that I have in the UK with people.

5:36

You know, they people say, okay, fine economists

5:39

say inflation is coming down. I don't

5:41

feel it. My rent is still going up. My

5:43

bills are still going up. My fuel prices are

5:45

still going up. It's exactly the same thing in

5:47

the US. The great irony is in the US,

5:49

it's slightly less bad than it is in Europe.

5:51

So we over in Europe kind of look at

5:53

America and we look at their growth, we look

5:56

at their inflation, we look at all of that

5:58

stuff and we're like, oh, you guys. Honestly,

6:00

you don't know how good you've got

6:02

it. But frankly, if you're trying to

6:04

subsist and you're just trying to make

6:07

do and try and keep your finances in order

6:09

and be able to afford the food you need

6:11

for you and your family or children and so

6:14

on, that is not getting

6:16

any easier. In fact, it's getting tougher because

6:18

inflation is just a measure of how fast

6:20

prices are rising. The fact that

6:22

they're rising a bit less quickly than they were before,

6:24

that's kind of another handle there, given they've gone up

6:26

by 20%, 30% in the last few years. None

6:31

of which is to suggest that politicians

6:33

on either side of the Atlantic won't

6:35

be crowing about their achievements if they

6:37

hit their inflation targets. I mean, suddenly,

6:39

Andrew Bailey acknowledges this

6:41

as a good thing. Rishi Sunak is

6:43

looking at it as a potential tool

6:46

for a future election. And you mentioned the publication

6:48

of the data come April. I mean, if inflation

6:50

gets to his 2% target, he

6:54

will certainly be using that in an election

6:56

campaign. I suppose the question is, when you

6:58

look at the Eurozone and inflation there is 2.4%, France

7:01

2.4, Germany 2.3, through much

7:03

credit, Rishi Sunak A can personally take

7:05

for what is going on and B,

7:07

whether or not actually we are in

7:09

a good place when you look across

7:11

the channel. I can understand

7:13

why the government wants to take credit. But the reality

7:15

is that it is mostly the Bank of England's job

7:18

to try and deal with inflation. And

7:20

so the main force bringing that down has been interest

7:22

rates. I suppose it is

7:24

fair that the government hasn't been splurging

7:26

in a particular way that is inflationary.

7:29

But, yeah, broadly speaking, I think

7:31

that there are bigger forces here. And I think

7:33

that is the important thing to remember. You know,

7:35

when the UK faced this energy price shock, it

7:37

wasn't just because of UK policy, it was because

7:40

energy prices around the world were going up so

7:42

fast. It is because we are a

7:44

big energy importer and we depend on gas

7:46

importers from overseas. And those gas prices, guess

7:48

what? They just went up really quickly. So

7:51

we are in a tempestuous sea at the moment

7:53

and so are many other countries around the world.

7:56

The good news, OK, with this inflation shock, a

7:58

lot of people were worried. early on, the

8:01

higher prices that people were paying was

8:03

going to trigger this inflationary spiral, as

8:06

they call it. So inflation

8:08

goes up, the price that you're paying, a

8:10

supermarket goes up, you demand a higher salary

8:13

from your boss, understandably, reasonably. So they

8:15

put up your earnings and then you

8:18

have this spiral. Not that wages haven't

8:20

gone up there, but doesn't that they've

8:22

got out of the control. However, other

8:25

commentators that I have been looking at

8:27

this morning have pointed to wage inflation.

8:29

They've pointed to inflation in the

8:31

services sector. If inflation in both

8:34

of those areas remains strong, isn't

8:37

it just possible Ed, that there might

8:39

be some point in the not too

8:41

distant future when we are not talking

8:43

about central bank interest cuts, but

8:45

instead we're talking about the Bank of England

8:47

perhaps hiking again. Where interest rates are right

8:49

now, 5.25%, as far as they see

8:53

it, even though, even if interest rates stayed at

8:55

5.25%, they are still actively pushing

8:59

the brake pedal on the UK economy

9:01

right now. In other words, you

9:04

know, would they actually need to hike interest rates or would

9:06

they need to just leave interest rates a little bit higher

9:08

for a bit longer? I think, you

9:10

know, the latter is more likely they would just kind of leave

9:13

them a bit higher. Is there not something

9:15

of a symbiotic relationship between the central banks

9:17

of big western economies like the United

9:19

States and the United Kingdom? If the

9:21

Fed holds off on cutting interest rates

9:23

and we go ahead with it, what

9:25

does that do to the pound? I

9:28

mean, everyone in essence is shadowing what

9:30

the Federal Reserve does. So, you know,

9:32

there was an old phrase about when

9:34

the US sneezes, the rest of the

9:36

world catches tolls. Even now everyone

9:39

is just looking towards, you know, J-PAL, the head

9:41

of the Federal Reserve to try and work out

9:43

what they're going to do. And frankly, whatever they

9:45

do, we'll probably end up doing the same thing

9:47

a few months later. Or maybe we'll do it

9:50

like one month before, but it's kind of because

9:52

it's clear that they're heading in that direction as

9:54

well. Because like you say, this is where a

9:56

lot of the big monetary force around the world

9:58

is. And actually on that front. It's

10:00

a similar story. Not that right, not that long

10:02

ago. The head of the Federal Reserve was saying

10:06

Probably we're gonna be cutting interest rates soon. And

10:08

now he's saying or giving the signal maybe not

10:10

so sure It's gonna be so soon. It's the

10:13

same thing on both sides of the Atlantic and

10:15

it's quite nervy I think look I

10:18

mean, I have to admit I do

10:20

not know exactly where the International Monetary

10:22

Fund building is But I suspect that

10:24

not too far away from it. You've

10:26

probably got some pretty decent shopping opportunities

10:30

Clearly in this country people will be focusing

10:32

on, you know, how much money they have

10:34

in their pockets all this Grand

10:36

macroeconomic theory is fascinating stuff for you and

10:38

I to talk about but but ultimately people

10:40

want to know how much disposable income They're

10:42

going to have and you know

10:44

retailers want to know if they're gonna be coming

10:46

in and spending it What do you think that

10:48

the kind of the the effect of what we

10:51

are seeing? You know where you are and what

10:53

has happened at the Bank of England today? What

10:55

effect is any that will have

10:57

on the metaphorical high school? That's

11:00

a good question I think things are starting

11:02

gradually to improve in terms of spending and

11:05

And people in the UK still have a little

11:07

bit of saving lesson in the pandemic So

11:10

it's been an interesting difference between the

11:12

US and the UK is

11:15

that the US essentially spent nearly

11:18

all of their Pandemic savings

11:20

or if we in the UK we didn't spend it

11:22

some of it got inflated away frankly But we didn't

11:25

we didn't spend it all and that means you

11:27

know There is this wall of money

11:29

not maybe not as big as people would like but

11:31

there's a bit of a wall of money That's kind of

11:33

waiting there for people to make purchases So

11:35

I think there is still an optimistic

11:37

kind of view of the next few years But

11:39

the problem is there's just a lot of scary

11:41

things going on out there in the global economy

11:44

and diplomacy making that story

11:48

Just a little bit more nerve-racking than it was before

11:51

Ed, thank you In

11:56

a moment, we'll continue to focus on the

11:58

economy and on retail and production particular

12:00

vaccine. Welcome

12:15

back. So, inflation is down and

12:17

expected to drop further, meaning

12:20

that whilst the price of stuff

12:22

is still increasing, it's not increasing

12:24

anywhere near as quickly as it

12:26

was, say for example in March

12:28

2023 when food inflation was running

12:30

at a staggering 19.1%.

12:34

But what does this mean for retailers and of

12:36

course all of us that shop? As

12:39

mentioned, ASOS has seen a massive

12:41

drop in UK sales. British brand

12:43

Superdrive faces administration if it

12:45

doesn't get its house in order sharpish. So

12:48

will these inflation figures have any

12:50

positive effect? Russ

12:54

Mold is investment director at AJ Belt and he

12:56

joins us on the daily. Let's start if we

12:58

can with ASOS. Their

13:01

sales down year on year, 16% in

13:03

the United Kingdom. Do they describe

13:06

it as a difficult consumer backdrop,

13:09

having an effect on what they themselves describe

13:11

as the young ASOS demographic? What does

13:13

that mean? What's specifically about the way

13:15

in which the UK economy is going,

13:18

where wages are going, where disposable income

13:20

is going at the moment, has had

13:22

this effect? ASOS is a global

13:24

player, so it sells to Europe, the US

13:26

as well. But if you look at what's

13:28

retailing all about, it's about right product, right

13:30

price, right format. And if you nail it

13:32

like Next has done for example, then you

13:34

can continue to make really, really good money

13:36

in this market. Where is ASOS being tripped

13:38

up? Well, I guess it's got the right

13:40

format because it's online, so it's down to

13:42

product and perhaps down to price. And then

13:44

you're looking at things like competition. You have

13:46

Sheen and Temo over snapping its heels. Now

13:48

they're probably a slightly different price point, a

13:50

lower price point there I say, but in

13:53

straighten times you can understand why shoppers would

13:55

perhaps look at that. There probably has been

13:57

some change in consumer tests. I mean, our

13:59

daughter, she's much more into vintage and other

14:01

areas and she's very much more of a Gen

14:03

Z type, less conspicuous consumption, more

14:05

curated buying, perhaps better but less, she

14:07

would argue. And you also have scrutiny

14:09

on assets not just for its cost

14:12

base, more and more consumers are

14:14

looking at the environment, the mental point of view

14:16

or a social point of view, some of their

14:18

goods are clearly very competitively priced. And I think

14:20

some shoppers are looking at the sourcing of that,

14:23

you know, they're not using sweated labour and they'll check

14:25

very carefully for that and deny allegations of that just

14:27

as Boo Boo was done. But even if you're paying

14:29

minimum wage in some of these countries, there will be

14:31

people not having a very great time there and I

14:33

think some shoppers are increasingly aware of that as well.

14:36

Steve, I will admit that this is fascinating to

14:38

me because on the one hand you have rampant

14:40

wage inflation according to the kind of the frothier

14:42

at the mouth financial analysts and

14:44

yet people don't seem to be spending

14:47

it in the ways in which they would have traditionally.

14:49

I mean you mentioned at Vinta there, there are other

14:51

resale sites available. I'm currently

14:53

wearing a jacket that I picked up off one

14:55

of those sites and I like to think of

14:58

myself as one of those who does

15:00

pretty well, who has enough money in

15:02

the bank. Even my kind of consumer tastes have

15:04

changed as a result of I think a combination

15:06

of factors, perhaps peer pressure but also the economic

15:09

outlook as well. No, I think and you can

15:11

see some of this in SSS numbers. I mean

15:13

in the end that frightening sales drop figure that

15:15

you said the good news from the stock market's

15:17

point of view was it was no worse than

15:19

expected and the company's already flagged it and they've

15:22

stuck to some of their long return targets for

15:24

profitability and cash flow and they've actually got some

15:26

of their inventory mount and down. But if you

15:28

look at some of the day to day operating

15:30

metrics of the company in terms of site

15:33

visits, shipment numbers, regular customer users,

15:35

they're down and the average basket

15:37

size is broadly flat which again

15:39

at the time when you say

15:41

inflation has been running at 5,

15:44

6% on average suggest that customers are being

15:46

careful and they're either cutting back on volume

15:48

or cutting back on price or both. Let's

15:51

talk about another retailer, Superdrive. What for many

15:53

years was considered to be a real

15:55

British success story. Started out in a

15:58

market stall in Cheltenham with... I'm

16:00

told was just a first run of

16:02

five different t-shirts all the way

16:04

to the stock exchange. Now they're

16:06

delisting. First and foremost, just explain

16:08

what delisting means for our audience

16:11

and why this absolute behemoth of

16:13

British retail seems to be struggling at the

16:15

moment. Public company means that the shares of

16:17

trades are on the stock market and owned

16:20

by the public, whether it's pension funds or

16:22

private individuals. Private company means there

16:24

are no shares to trade on the stock market

16:26

and it's controlled by an individual or an entity.

16:28

In this case, it seems as if the

16:31

founder and long-term shareholder, Mr Julian Duncasson, that

16:33

he's going to be putting money into the

16:35

company to try and get back onto a

16:37

healthy basis, but then buying up all of

16:39

the shares and taking them off the stock

16:41

market so he can get on with a

16:44

job of turning it around in private without

16:46

having to report quarter numbers or interim numbers,

16:48

six monthly figures to shareholders who might be

16:50

putting them wanting faster progress. Yeah.

16:52

You look at the share price at 1.500 pence

16:54

all the way down to five.

16:58

I mean, that represents a huge collapse, not

17:00

just in the value of the company, but

17:02

in the confidence that the market has

17:04

in the company. Where did they

17:06

go wrong? What can unseat any

17:08

company? It's competition, it's

17:11

regulation, it's changes in customer tests

17:14

and it's death. I think Superdry changing customer

17:16

tests has been a big issue there. You

17:18

could almost argue Superdry was a victim of

17:20

its own phenomenal success and it really began

17:23

to get big because of

17:25

Julian Duncasson's mashup

17:27

designs between preppy style and Japanese

17:30

glamour. Then David Beckham was an early model for

17:32

them and lo and behold, the thing went into

17:35

Galactic. This is no disrespect and this is

17:37

from somebody who was 55. When

17:39

you start seeing grandmothers and grandparents wearing this

17:41

stuff in the park, well, the cool kids

17:43

don't really want to wear it anymore. The

17:45

management team that's look over, clearly struggled to

17:47

maintain momentum. He's now back in and I

17:49

guess now it's very much up to him.

17:52

What's the next move for what was,

17:54

as you say, an innovative, dynamic, exciting

17:56

young brand? public

18:00

glare for a bit so we can crack on and try

18:02

and turn the company around. To what

18:04

extent does what we have heard

18:06

today away from the retail sector, those inflation

18:08

figures and the effect they may have on

18:11

the Bank of England, to what extent is

18:13

what happens next of pivotal

18:15

importance to companies like ASOS, like Superdry?

18:17

Yeah, it definitely will be. I mean,

18:20

at the moment, for those people who

18:22

are in a job and employment levels

18:24

are historically pretty high, things

18:26

actually aren't so bad at the moment because

18:28

wage growth is comfortably running ahead of the

18:31

headline inflation figure. Equally, you

18:33

dig into the headline inflation figure and the 6% odd

18:36

year on year increase in owner-owned occupier costs,

18:38

you know, rent and mortgages and bills, that's

18:40

not very funny and that is still putting

18:42

pressure on people. So it would be good

18:44

to see inflation cool further towards the Bank

18:46

of England's 2% target. It's

18:49

been above that for the thick end of three years. And where

18:51

the Bank of England takes rates from forward will be very important

18:53

because it affects how much people pay

18:55

on the credit card, their car loans and ultimately

18:58

further down the road, their mortgage. The

19:00

tricky bit of the Bank of England is what it's

19:02

really trying to do is set the cost of

19:04

money not for today, but for

19:06

two, three years time because that's when people's

19:08

mortgages roll over and that's when you get

19:10

the real impact. So that's the signs

19:13

of it, magic, art of it. So

19:16

just to generalize about the retail sector right

19:18

now, it is a mixed bag in terms

19:20

of who is up and who is down.

19:23

And if we are heeding from number

19:25

10, number 11 Downing Street, that we

19:27

are out of the woods, that

19:30

that might just be a little bit premature. There are

19:32

always winners and losers in any industry even if it's

19:34

going well. But right now I think retail is still

19:36

a very difficult environment. And if you look at what

19:39

we saw from say the UK quoted recruitment company this

19:41

week, you know, they're showing year on year drops in

19:43

net fee income at the moment, a lot of nerves

19:45

among candidates, you know, is it the right time to

19:47

change because I might be, you know, first, you know,

19:49

last in, first out if things go wrong. And

19:52

then employees are holding back because they're just a little

19:54

bit concerned as to maybe the political environment, what's going

19:56

to happen after the election and where interest rates going.

20:00

I think the headline GDP numbers do

20:02

suggest that we are, quote, turning the

20:04

corner and everybody's hoping so. You've always

20:06

got to be careful not to talk

20:08

things down because in every session it

20:10

can be as much psychological as physical.

20:12

But I think it is still a very, very finely

20:15

balanced picture. And if, heaven forbid, the oil price were

20:17

to say rocket for any unexpected reason, that would be

20:19

a major setback from both an inflation and a growth

20:21

point of view. So there are lots of moving parts

20:23

still here to keep an eye on. There certainly are.

20:25

Ross Mould, great to talk to you. Thanks very much

20:28

for your time. Thank you. So,

20:31

admittedly with caveats, the rate of

20:33

inflation dropping is good news for

20:35

the economy. No doubt the

20:37

government will take some credit for this,

20:39

although the governor of the Bank of

20:41

England, Andrew Bailey, has responsibility. But

20:44

as ASOS, Superdry and plenty

20:46

of other show, inflation is

20:48

but one bright spot on

20:51

a very murky economic snapshot. That's

20:55

your lot for this edition of The Daily. We'll see you again soon.

21:00

Bye-bye.