There may be trouble ahead. But while there's Christmas to celebrate, shoppers across the country this weekend are set to spend more than £2.5bn on a final binge ahead of an austere new year that promises costly increases in taxes, prices and household bills.
Although the Christmas shopping season has been disrupted by heavy snow, high-street retailers are reporting a modest rise in takings compared with 2009 as consumers treat themselves to furniture, household appliances, warm clothing and, unexpectedly, curtains.
Some shoppers are deliberately timing purchases ahead of the increase in VAT from 17.5% to 20%, which takes effect on 4 January.
"There may be an element of 'to hell with it, let's have a good Christmas and worry about it in the new year'," said Howard Archer, chief UK economist at research firm IHS Global Insight.
The British Retail Consortium says till receipts are far better than the low point in the economic gloom – Christmas 2008 – when retailers suffered a "bloodbath". But growth is slower than in 2009, when spending was up by 6%.
"We're likely to see a fairly weak performance in comparison to last year – we may or may not beat inflation of about 3.2%," said BRC spokesman Richard Dodd, who sees the holiday season as a hiatus before a likely downturn. "People, on the whole, tend to put their cares aside if they possibly can for Christmas and spend on what they want. But then concern about job cuts, a VAT rise and an increase in national insurance will kick in and people may rein in spending quite a lot."
John Lewis, a retail bellwether, rang up sales of £210m in the week to 4 December – only up 3% on last year – but says it has seen a sustained upward trend in sales since the half-term in October. Matt Wakely, director of selling operations, asked: "If you were going to buy a 50-inch television, why wouldn't you buy it now, avoid the VAT rise and have it to watch at Christmas?"
The Observer