Reports of recovery on high street 'premature'

Signs of improving trade on Britain's high streets are unsustainable and a lasting recovery may not emerge until 2011, the ratings agency Fitch said yesterday.

It poured cold water on positive trading figures from the likes of fashion chain Next, as well as a better-than-expected 1.2 per cent increase in overall retail sales volumes between May and June. Fitch said the revival was only temporary because trade received an artificial boost from a late Easter, pleasant weather and the fact that many stores began summer sales early. Retailers' margins had been squeezed by sales and they could also find themselves unable to withdraw promotions without suffering a fall in revenue as shoppers become accustomed to price cuts, Fitch added. The agency predicted UK consumer spending would be constrained through 2010, making a recovery unlikely before 2011.