Big UK discounts point to bleak Christmas

Major chains like Marks & Spencer are running promotions to lure shoppers in. Photo / Mtaylor848

The biggest names on the British high street were slashing prices by so much at the weekend that experts are predicting the worst retail Christmas since the collapse of Lehman Brothers.

The American bank's bankruptcy three years ago plunged the world economy into recession and saw the high street decked out in "sale" signs by November.

With confidence again at a low ebb, many Britons are delaying their seasonal spending.

Major chains including Marks & Spencer, Debenhams, House of Fraser, Gap and French Connection are running promotions - including discounts of up to 50 per cent on winter coats and party dresses - to lure shoppers who have just banked their last pay cheque before Christmas.

"This is the toughest it's been since Lehmans," said Richard Hyman, strategic retail adviser at Deloitte. "Lehmans was about sentiment; this is about real household economics."

High unemployment and rising food and fuel costs mean many families are worried about the cost of Christmas. A recent Bank of England survey found Britons were "going without" or "trading down" to avoid overspending and even raised fears that more store chains could go bust.

In such a competitive environment, retail bosses know eye-catching promotions are the only way to tempt shoppers, with many of the two- and three-day events pencilled into the calendar at the start of the year.

Retail analyst Nick Bubb said others, such as M&S's 25 per cent off women's knitwear, follow the mild northern autumn that created a backlog of winter clothing.

- OBSERVER