Festive high street slowdown

SHOPPERS are set to spend up to 20 per cent less on Christmas presents this year in what could be a devastating blow for the retailing sector.

• Despite fears over the festive retail outlook, Scots will be among the biggest spenders this Christmas Picture: Greg Macvean

Research released today by Moneysupermarket found that consumers plan to spend on average just 195 on festive gifts, down by 37 on 2009. The decline from last year's 11.6 billion equates to a total of 2.3bn being taken out of the seasonal spending spree.

Britain's biggest retailers have generally fared well through this year's tough economic conditions, a trend that is expected to be further confirmed today with the release of figures from high street giants Kingfisher, Kesa and John Lewis Partnership. However, caution still reigns throughout the sector amid forthcoming public sector cuts and tax increases.

Freddie George, retail analyst with Seymour Pierce, says it would be a "very substantial concern" if consumers did reign in on spending to the extent suggested by today's survey.

However, he believes these projections are overly-pessimistic.

Robert Clark, senior partner at Retail Knowledge Bank, says he would also be surprised if these stated intentions in fact become reality.

"It does seem rather a significant reduction, and one does suspect that people feel they ought to be saying they will cut back by this amount. It is a high figure, and will probably be too high.

"While confidence might be low, the practicalities are such that, particularly for the younger generation, cutting back to that sort of extent is something they find difficult to implement."

Sian Harrison, voucher expert at Moneysupermarket, said it would come as a blow to many people that their finances are in a worse state this year than last. However, consumers are expected to look to a variety of methods to both spread and reduce their spending.

Amid the uncertainty surrounding the impact of the government's Comprehensive Spending Review to be announced on 20 October, nearly one in five people have already started their Christmas shopping in an effort to spread their costs. Moneysupermarket said bargain hunters also planned to take advantage of festive deals, Of the 3000 people surveyed, 72 per cent said they would use discount vouchers to offset the cost of Christmas.

Though public-sector cutbacks are expected to have the biggest impact in places like Scotland - where a higher proportion of people are employed by government and related agencies - Scots are expected to be among the biggest spenders this festive season.

According to Moneysupermarket, the largest average spend will be in Northern Ireland, where each adult will splash out a total of 268.This is followed by the north-east of England (237) and Scotland (223).

Londoners ranked as the most frugal, saying they expected to spend just 163.