High street cowed by pile of savings

Fears of a dire Christmas for the high street mounted yesterday as new figures showed worried consumers have built up a £40bn savings pile during the past year.

The British Bankers' Association's latest data revealed 6.1 per cent growth in deposits over the past year to £688.9bn as consumers bunker down against economic fears, with savers squirrelling away £3.4bn in October alone.

The BBA's statistics director, David Dooks, said: "People continue to build up deposits, particularly in ISAs, as a buffer against uncertainty."

The latest figures come as nerves jangle among retailers with a month of the crucial festive trading season remaining. Analysts are braced for a clutch of sales from the high street's biggest names within days in a desperate bid to get the tills ringing.

Freddie George, retail analyst at the broker Seymour Pierce, said: "Christmas spending has yet to get into full swing."

He warned that Debenhams' early sales last week appeared to have flopped and expects rivals House of Fraser and Marks & Spencer to launch sales in the next fortnight. Even the department store chain John Lewis, which has weathered the retail squeeze in better shape than most, saw "mixed trading".

Mr George said: "There are a lot of people saving up for Christmas and pay day is not until next week. When we get to the end of next week we could see quite a few retailers panicking and we could see some aggressive sales."

The BBA data showed households spending £219m on their credit cards over the month, although this was dwarfed by a £426m repayment of loans and overdrafts. The total amount outstanding on credit cards as of last month was £34.3bn, £200m below last year.