Consumer Spending At Weakest In Decade

The Evening Standard today reported that consumer spending will slump to its weakest since the early Nineties recession as household debt grows, unemployment rises and the property market stagnates, according to John Butler, chief UK economist at HSBC That will force the Bank of England to cut interest rates from their current level of 4.75 to four per cent by the end of next year.

HE annual value of High Street sales has fallen for the first time in almost 40 years, raising fears for the future of more big name stores. Retail sales were running at £4.6bn a week in April, down by 0.1% on the same month last year. This represents the first annual fall in cash terms since May 1967. The gloomy figures, published by the Office of National Statistics, confirm earlier studies by the CBI and the British Retail Consortium.

John Butler said: 'Our concern is that spending has slowed sharply despite a background of higher employment, reasonable income growth, high consumer confidence and wealth and low interest rates.' Some major players in the High Street have already gone to the wall. Allders employed 7,500 people in its 45 branches. But after 143 years of trading it collapsed in January with debts of £15m and a massive pension deficit.

Retail entrepreneur Harold Tillman saved the Allders name after buying the group's flagship store, in Croydon. The deal was signed this month for an undisclosed sum, saving 500 jobs. The gloom among retailers appears to be a direct effect of the slowdown in the housing market.