Tough Times For British Retailers

As was reported in the Guardian, Britain's retailers are facing tough times in trading with a combination of poor weather, higher utility bills and a slowing housing market affecting activity, the CBI said yesterday. Analysts predicted a spate of spring bargains for consumers as retailers seek to rid themselves of unsold stocks. Of the 200 firms to respond to the CBI's distributive trades survey in the first half of March, only 10% said business was good for the time of year, against 47% who said it was bad.

The CBI said the gap of 37 points was the poorest result since November 1992, two months after the UK suffered the psychological shock of sterling crashing out of the exchange rate mechanism. It was not a one-off month affected by the wintry weather; the CBI said figures for the latest three months showed no increase over the same period last year. It added that consumers' wariness of spending in the shops was matched by a reluctance to purchase big-ticket items.

In the City, economists said the gloomy news from the high street put paid to any prospect of an increase in interest rates at next month's meeting of the Bank of England's monetary policy committee (MPC). In what would be the last meeting of the nine-strong committee before a May 5 election, rates are expected to be left at 4.75% for the eighth month in a row. Some economists believe the next move will be down if consumer spending remains sluggish.

Vicky Redwood, an analyst at Capital Economics, said: "The survey suggests the trend in retail spending continues to weaken. As such, it casts further doubt on the MPC's assumption that the housing market downturn will have little negative effect on spending." Thirty-one per cent of retailers said sales were up last month compared with a year earlier but 40% said they were down.