Economy Fragile As High Street Spending Falls

By Gerard Tubb, North of England Correspondent

A fall in high street spending for the second month in a row has underlined the fragile nature of the long-awaited economic recovery.

Figures from the British Retail Consortium show like-for-like sales dropped by 1.7% in March compared with the same period in 2013, with the later timing of Easter this year blamed for the fall.

Online sales rose 12.8% last month, helped by the lack of Easter holidays, which tend to drive consumers out of the house and to the shops.

Meanwhile, for the three-month period to March, food sales were down 2.7% on the year before.

The figures come a few days after economic forecasters EY ITEM Club predicted consumer spending will lead the recovery in 2014.

They expect wages to rise in real terms for the first time in six years, with pay up by 1.7% and inflation falling to 1.6%.

Consumer spending is predicted to drive the economic recovery

The conflicting reports are echoed at Browns department store in York where managing director Nick Brown says he is selling more big ticket items like furniture.

But customers are increasingly taking the option of interest free credit which reduces profit margins.

Many shoppers in the store said they did not feel any better off than they did this time last year.

Economist Nida Broughton from the Social Market Foundation warned consumers are still suffering after losing a decade of growth.

"Real wages have taken a cut of 7% since 2008 so we're nowhere near where we were.

"We're still poorer than we were. In fact real wages are at the level they were at in 2004, so we've got a lost decade to make up for."

The mixed picture for retailers was evident in results from JD Sports Fashion and Debenhams on Tuesday.

Britain's second largest department store made pre- tax profits of £85.2m in the six months to March - down 24.5% - largely because of heavy discounting at Christmas.

JD Sports said full year group profits were up 5% - helped by an exceptional performance in Sport and a reduction in the losses in its Outdoor division.

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