Fears grow of 'retail relapse' this year

British shopkeepers could suffer a "relapse" into deteriorating trading conditions this year, as rising taxes, interest rates and the uncertainty over the next government's economic policy takes its toll on consumer spending.

The KPMG/Synovate Retail Think Tank, which had predicted the improvement in its Retail Health Index to continue into the first quarter of this year, has warned of "dark clouds gathering on the horizon" and that consumers will make 3 per cent fewer shopping trips this year

Nick Bubb, of Arden Partners, said: "A mini-reflationary bubble has been created. But that has to burst eventually and the 'phoney recession' that we had in 2009 will turn into the real thing at some stage this year."

Despite robust festive sales, retailers' fears over consumer spending this year were intensified by anaemic GDP growth of just 0.1 per cent in the fourth quarter of 2009, according to the Office of National Statistics last week.