High Street’s woe ‘is set to linger’ despite recent fillip

Retailers' misery will drag on until 2011 as the recent revival in stores' fortunes proves unsustainable, a leading ratings agency has warned.

High Street sales rose 1.2% in June, according to the Office for National Statistics, while chains such as Next and B&Q have reported stronger-than-expected sales.

But Fitch argues that shops have benefited from the sunny weather, Easter falling late and shops slashing prices early for the sales, rather than the green shoots of economic recovery. "Rather than signalling an economic recovery, the recent better-than-expected trading results have been boosted by temporary factors such as weather and early aggressive promotional activities and clearance sales," retail and consumer analyst Ching Mei Chia said.

She said the spectre of rising unemployment looms over the sector, and suggests its recovery will lag behind the broader economy: "Consumer spending will be constrained through 2010, likely delaying a lasting recovery for UK retailers into 2011."