By comparison the situation is definitely better in the euro area while in Malta business is still worryingly poor with weak demand, weak consumption and poor sales across the board and particularly in the retail business.

The ordinary Maltese retailer need not look into Eurostat statistics, which I will quote in this contribution later, to know how his business is faring compared to his European counterparts and to his own performance the previous year. He knows that his clientele is dwindling, that he is struggling to make good sales and that his profits are plummeting. Government self-praise can never be a substitute for the clinical analysis that the ordinary retailer makes to assess his performance and determine whether he is better off today than he was only last year when his situation was already bleak.

The retailer knows that his customers are hard pressed for cash. He knows that his business is passing through a difficult period not necessarily because his product or service is poor, or because of rampant competition in this sector, but rather because families cannot make ends meet. Prices of essentials have become far more expensive and customers have to make priorities. Doubtlessly the utility rates have not only negatively impacted on business by increasing operating costs and denting their profitability, but they have also dampened demand and consumption as families are channelling their incomes to pay for essentials first. The average consumer hardly has enough cash by the end of the month and this is having a telling effect on sales.

Petrol and diesel prices have increased five times since the beginning of the year and while they persistently rise every time international oil prices soar, they simply remain stable when international oil prices fall as is happening right now. There can be no doubt that these are government induced costs in the literal sense of the phrase because the energy corporation wants to keep fuel prices high even when there are no external pressures to justify increases and when they are supposed to fall for the benefit of the consumer.

Now the minister for the economy might even go as far as to say that all I am saying is bull and that business cannot be better. I have been here before. He will go as far as to say that the sun rises at night and sets in the morning.

So I’ll have to back myself with some statistics from Europe – indeed according to a Eurostat release of the 3rd August 2011, the volume of retail trade in the euro area fell in June 2011 compared to June of 2010 by only 0.4%. Among the member states for which data is available, total retail trade fell in twelve and rose in nine. The largest decreases were observed in Spain (-8.3%), Romania (-8.2%), Portugal (-5.9%), Belgium (-4.3%), Malta and Slovakia (both -4.2%), and the highest increases in Luxembourg (+12.4%), Lithuania (+7.1%), Latvia (+5.4%) and France (+4.6%). We certainly wouldn’t like to compare ourselves with Latvia and Lithaunia if we are to aspire to be the best in Europe but indeed these countries are performing far better than us.

But the situation is worse when the analysis is made on a monthly basis compared with the corresponding months of last year. In January 2011 retail sales in Malta fell by 1.5% in January 2011 compared to January 2010, by 3.2% in Febraury, improved marginally in March, fell again by a staggering 12.5% in April, by 5.8% in May and by 4.2% in June. You wouldn’t be surprised if the Government expects a round of applause for this dismal economic performance.

In Malta we have very peculiar characteristics. Retail business definitely performed better in 2009, right in the middle of the economic crises, than in the current year - when the government is boasting that we couldn’t be having it better in spite of international pressures. Go tell it to the retailers and they will send you to hell.

The bottom line is that retail business in Malta is in difficulty because government is making it hard for families to cope with government induced costs. This is having an overall effect on consumers’ purchasing power. The lethal impact unleashed by the power rates is definitely the cause and effect of the poor state of affairs in the internal market. But other long standing problems, like burocracy and the poor regularisation of monopolies by our regulatory authorities, put more spokes in the wheels.

A Government that is bent on collecting revenues as the body and soul of its economic policy is destined to produce the sort of effects our retailers are currently experiencing in the internal market.

DR GAVIN GULIA LL.D., M.P.

(Dr Gulia is the Opposition’s Main Spokesman on Tourism and Air Malta)