Big summer sales discounts and an influx of overseas visitors taking advantage of the euro’s strength against the pound led to a sharp revival in London’s West End shops in June, according to new data.

Footfall across the West End’s 600 shops was 6.6 per cent higher last month than in June 2007, although it was 1 per cent lower across UK regional cities, said Springboard, a footfall data tracker commissioned by the New West End Company.

Separately, the British Retail Consortium reports on Monday that retail sales in central London rose 8.7 per cent year on year in June, on a like-for-like basis.

The report follows much-improved sales figures from John Lewis, showing takings at its flagship Oxford Street store jumped 11 per cent year on year in the week to 12 July as its clearance sale got into full swing. Selfridges ended sales early because of strong demand.

Yet even a boost to the capital from holidaying French fashionistas – now the second largest group of overseas shoppers in the West End – will not be enough to dispel the gloom pervading the UK retail sector as people start to feel the pinch of rising food and fuel prices, low wage growth and tight credit conditions.

Alistair Darling, chancellor, said this weekend that the economic downturn looked set to be more profound and longer-lasting that initially expected, and that people felt under too much financial strain for raising taxes to be an option.

“My judgment at the moment is that there are a lot of people in this country who feel they work hard, they make their contribution and they’re feeling squeezed,” he said in an interview with The Times.

Consumers’ ability to defy a downturn will be one of the most important factors determining whether the economy slips into recession or pulls through after a milder slowdown. So far, official figures on retail spending have been remarkably strong, but economists expect data to show a sharp retrenchment this Thursday.

A clutch of reports published on Monday corroborate this gloomy outlook. The Ernst & Young ITEM club forecasts growth will slow from 1.5 per cent this year to just 1 per cent in 2009 with consumer spending growth almost grinding to a halt.

Peter Spencer, economic adviser to the ITEM club, said he feared consumers would move “straight from denial into despair”, adding that the housing slump now seemed driven as much by “a collapse in confidence” as by tight lending conditions.

The website Rightmove reports that asking prices for properties advertised on its site fell 1.8 per cent in July, and were 2 per cent lower than a year earlier.

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