British retailers brace themselves for more high street gloom

Graeme Evans, PA City Editor

A study by the CBI found one-in-five retailers believed the overall business outlook would deteriorate in the next quarter the first time in seven years that firms had been more despondent than hopeful about prospects.

The CBI's underlying annual sales trend measured over three months to cancel out blips is also at the weakest in the survey's 22-year history.

That was after 45% of retailers reported August sales volumes down on a year earlier, compared with 27% who reported a rise.

The balance of minus 18% is despite heavy price discounting and longer than normal summer sales.

John Longworth, who chairs the CBI's distributive trades survey panel, said: "Conditions in August continued to be very tough for retailers and many fear the outlook is going to get worse before it improves, despite the recent interest rate cut.

"Some held earlier and longer summer sales despite margins already being very tight but there has been little sign in this survey of a response from consumers."

Mr Longworth, who is an executive director at Asda, said the housing market slowdown continued to have a negative effect on many retailers, particularly DIY and furniture chains.

Around 34% believe the gloom will continue into next month with further declines in volumes.

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