Fears for high street as growth slows further

TWO economic reports cast further gloom on prospects for the UK economy today, with the British Chambers of Commerce (BCC) warning that growth has slowed "considerably" in the past few months.

Meanwhile, the British Retail Consortium (BRC) noted that retail sales growth fell sharply in September, as demand for non-food products slid for the first time in more than a year.

The BCC's quarterly survey of 5,000 businesses showed "worrying" falls in exports as companies faced up to "serious" challenges in the coming year. In particular, the service sector - the engine room of the UK economy - returned a "dismal" performance. Manufacturing proved more resilient, the report added.

Despite the "disappointing" figures, covering the three months to September, the BCC said UK growth remained in positive territory, adding that a new dip into recession could be avoided.

The business group called for measures to sustain the economic recovery and support companies as they deal with the government's austerity measures and the new year increase in VAT, including an extra 50 billion worth of quantitative easing by the end of the year.

The BRC revealed that like-for-like sales grew by just 0.5 per cent last month, compared with the 1 per cent gain reported in August. Consumer fears affected sales of "big ticket" items on the high street ahead of public spending cuts, with furniture such as fitted kitchens and bathrooms hit hard. This left non-food sales in the red for the first time since August 2009.

BRC director-general Stephen Robertson said that what growth there was largely came from food firms, and this was predominantly driven by food inflation at about 4 per cent.

"Sales growth continues to be poor. We've now had six straight months of low growth."