Analysis: Fearful, cash-strapped consumers can’t give businesses any hope of life-saving recovery

HMV, Mothercare, Thorntons, Thomas Cook, Barratts, Blacks Leisure, La Senza: if the sirens sounding in the high street are for real, these could prove but the first names in an explosive casualty list on Britain’s high streets next year.

Richard Fleming, head of restructuring at KPMG, warned last week that he expected “a raft of administrations in the next four months”. And he includes on that sinking raft “anything consumer-facing, be that travel companies, gyms, hotels, restaurants, automotive component suppliers or food producers.”

Such are the reports from the high street that “the worst business to be in the world right now”, writes John Stepek of Money Morning, “is anything that involves selling stuff to the UK consumer”.

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Alan Hudson of Ernst & Young has warned that the end is near for “zombie companies” in all sectors.

Accountancy firm RSM Tenon reckons that one in five food manufacturers. caterers and travel companies is at risk of going under in 2012.

Not for a generation have Britain’s high street retailers approached a new year with such foreboding. The big squeeze on household incomes is cited as the main reason. It’s not just that consumers have less in real terms to spend than last year. It’s the duration of the squeeze. According to the respected Institute for Fiscal Studies, Britons will be worse off in 2015 than they were in 2002. In fact, we are facing the worst stagnation in real incomes (that is, adjusted for inflation) since records began in 1961.

And it’s more than just the pinch of austerity. Households and businesses alike are fearful of spending at this time because of the continuing crisis over eurozone sovereign debt. Lofty accords may have been agreed, but nothing has really been done to haul Italy (with bond yields back at 7 per cent) out of the mire, while Greece is all but written off by bondholders. Under this black sky, asking consumers to spend now is like hoping for a boom in garden furniture just before the onset of a blizzard.

And households are in no mood to gear up. Last month saw a net repayment of £171 million in unsecured consumer credit – the third net repayment in four months. Consumers want to cut their debt, not pile up more of it.

Then there’s the rickety finances of many retail companies, acquired in a spasm of debt-fuelled leverage by inexperienced private equity firms now at the end of their rope. Many other businesses have hung on waiting for a recovery that has failed to show. Both the means and the will to carry on are being drained by the day.