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Business News

Retail confidence at two-year low

Fears over the health of the UK retail sector were fuelled today as a flooring firm fell into administration and confidence on the high street hit a two-year low.

Some 53 Floors 2 Go stores have shut after administrators were called in, while a CBI survey revealed the worst reading since February 2009 for optimism over the next three months.

Elsewhere the boss of the Co-operative Group warned that retailers were facing the worst conditions in 40 years, while Topps Tiles said like-for-like sales were down by 10.4% in the seven weeks to August 20.

A separate survey from Nationwide revealed that consumer confidence continued to fall last month amid increased uncertainty around the UK economy.

The deluge of bad news underlined the fragile position the UK economy is in - after experiencing sluggish 0.2% GDP growth between April and June.

The Nationwide said stock market turbulence and the riots that rocked the country earlier this month would trigger a further collapse in confidence in August.

Nationwide's chief economist Robert Gardner said: "With the economic recovery still facing strong headwinds, it is unlikely that we will see any considerable improvement in confidence in the remainder of 2011."

This warning was followed by an equally gloomy assessment of the economic climate from Co-op chief executive Peter Marks.

He said: "At the full year, we warned that the downturn was biting deeper than anyone had expected and predicted that challenging trading conditions would continue into 2012.

"This has clearly proved to be the case. Indeed, it is the worst I have seen in over 40 years of retailing and, against this backdrop, the results we are announcing today are in line with our expectations."

Topps Tiles, which has 300 stores in the UK, saw its shares plunge more than 27% at one stage following its dismal update, which the company blamed on "a decline in consumer confidence".

Elsewhere on the stock exchange, retail shares took a pounding amid poor sentiment towards the sector.

Marks & Spencer was down more than 3%, Next lost more than 2%, Dixons Retail fell nearly 2%, Primark owner Associated British Foods lost just under 1%, and B&Q parent Kingfisher declined more than 3%.