In anticipating a recession, discerning City investors normally adjust their portfolios in favour of defensive sectors – pharmaceuticals, tobacco, utilities and grocers. They recognise that these sectors will generally outperform a weak market.

This view continues to be vindicated by Thursday’s impressive sales figures from Morrisons, showing 6.5% like-for-like growth over the last six weeks to January 3rd, which capped a highly successful Christmas for UK grocers.

Tesco, with its 30% market share, reported underlying UK like-for-like sales growth of over 4% – after adjusting for the double vouchers offer. Sainsbury, which vies for second place with Asda, reported similar numbers. Up-market grocer, Waitrose, has also sparkled, partly at the expense of Marks & Spencer, whose food sales were lacklustre.

Of course, strong sales growth does not necessarily translate into higher profits. But, given these figures, is there really a recession on? Certainly, December was a very encouraging month for UK retail: the British Retail Consortium has calculated a like-for-like sales increase of over 4% compared with December 2008.

Before arguing that the recession is actually a fiction, six caveats:

  • December 2008 comparators are very weak;
  • Sterling’s decline has attracted tourists into the shops;
  • January’s 2.5% VAT rise may have boosted December’s sales;
  • Many special offers were available;
  • Non-food retailers’ performances were far more mixed;
  • Many former competitors, such as Woolworths, are no more.

The fact remains, though, that recession-driven Britain is still piling into the country’s top grocers, even if elsewhere on the High Street life is far more challenging. Both shareholders and customers are benefiting from the success of the UK groceries’ sector. And, in Tesco’s case, its very focussed export strategy is bearing fruit.

But, given the predictable failure of various Competition Commission enquiries, what, pray, will the proposed Supermarket Enforcer – nicknamed Offtrolley – bring to the party?