David Prosser: No thaw yet for retailers

Outlook: Higher VAT, awareness of tax increases and lower public spending to come are now making shoppers ultra-cautious

Double dip or snowmageddon? The fact that the retail sector saw its worst start to the year for 15 years last month, at least on one of the British Retail Consortium's key measures, just might be explained by the cold snap, with shoppers huddled by the fire rather than out spending their money. A more convincing explanation, however, is that last month saw the beginning of a trend for consumers to spend much less.

The signs of the latter were there well before the snow began falling. Look at the extent to which consumers paid down debt in the second half of the year, for example, with reluctant spenders already damaging the less secure retailers. Ethel Austin, for instance, has not called in the administrators only because its customers stayed at home for a week or so during the big freeze.

January, though, seems to have brought a step change in consumer attitudes. Higher VAT, awareness of tax increases and lower public spending to come, and the fact that retailers did their best to encourage pre-Christmas splurges, are now combining to make shoppers ultra-cautious. The weather will – eventually – improve. But a more positive outlook for the high street is unlikely to accompany the arrival of spring.