Christmas high street trading is looking tough for many top names as shoppers opt to keep their cash in their pockets.

On the back of news that Woolworth’s and MFI have called in the administrators and sales are down at the John Lewis chain, the PC World and Curry’s super group revealed sales have fallen through the floor.

Brand owner DSG International reported a half-year loss of £29.8m, compared with a profit of £52.4m in the same period last year.

The company said that sales in stores open longer than a year were down 7% during the period.

Clinton Cards also reported a sharp fall in sales with like-for-like sales – which strips out the impact of store openings and closures – fell 6% in the 16 weeks to 16 November.

Sales are also down 7.1% at its Clinton branded stores, and 2.5% lower at the company’s Birthdays outlets.

The firm has opened 12 new stores since August, but closed 21. It now has 1,042 outlets across the UK, comprising 697 Clinton stores and 345 Birthdays shops.

Market trading in the City closed with the FTSE at 4153, 18.56 points down for the day.

US President elect Barack Obama has promised help is on the way for the country’s beleaguered economy ‘from day one’ he is in office. 

Wall Street responded to his remarks and the appointment of more economic advisors with approval. The DOW closed up 247 at 8726.

Meanwhile, car giants Ford, GM and Chrysler have been told to pull their act together and come back to Washington with a viable financial plan if they want $25 billion in state aid.

On the financial markets, the Pound closed at £1.53 against the US dollar and £1.88 against the Euro.

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Tags: British Economy, British Pound, Economic Crisis, Economy, FTSE, Retail, Saving, UK economic activity, UK Economy

The Great VAT Con comes in to effect today – most people believe that a 2.5% cut in VAT from 17.5% to 15% means a £2.50 drop in prices for every £100 spent at the tills.

Let’s demonstrate the con with some basic maths – £100 plus 17.5% is £117.50.

A 2.5% cut in VAT to 15% is not £100 plus £15 equals £115.

Why not? Because that 2.50% cut only chops £2.10 off the price.

So the great giveaway to encourage extra spending is not so great, and worst of all, the Chancellor Alastair Darling has spun the move to make everyone feel better in a bid to loosen purse strings.

The problem is the Government is following the doctrine of Keynesian economics that put us all in this mess in the first place. The great economist John Maynard Keynes talks about the ‘paradox of thrift’.

Basically this means people stop spending and hang on to their cash in a recession because they want liquid assets handy in case they fall on bad financial luck – as if a recession wasn’t bad enough luck.

This makes the recession worse because businesses can’t sell their products, so output declines even more, making the recession worse. The economy is stuck in an ever-decreasing circle until circumstances allow people to spend again. 

That’s why the Government wants us to spend their way out of recession to counteract the paradox of thrift.

The question is, have they done enough to kick-start the economy or will the whirlpool continue to suck in jobs and businesses? One the whole, it looks like too little.

After a week of more bad news in the High Street, with Woolworth’s and MFI going in to administration and B&Q closing nine trade depot superstores, the John Lewis partnership’s weekly trading report shows a continuing downward trend.

For several weeks running, the report has showed a consistent 13% year-on-year fall in sales.

Other big names teetering on the bring are electronics conglomerate Curry’s and PC World after announcing £15 million losses, Clinton Cards, Land of Leather, and DIY giants Focus and Fads. 

The car industry worldwide is gripped by crisis as all the big carmakers in the US, Japan and Europe undertake cost-cutting exercises. 

The ‘nationalisation’ of the Royal Bank of Scotland completed last week, as the taxpayer now owns just less than 60% of the bank.

On the housing front, Nationwide Building Society released figures showing house prices had fallen only 0.4% in November – a 13.9% year-on-year drop.

The markets were a little more forgiving last week.

The FTSE100 continued a slow recovery from the five-year low of 3665 on October 27 to finish last week at 4288 – a rise of 15% over the month.

Wall Street bounced back from 18.5% from a 12-month low of 7449 the previous week to close at 8229 on Friday.

On the money markets, the Pound strengthened slightly to £1.49 against the US dollar. Against the Euro, the Pound moved slightly from £1.18 to £1.19.

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• Barclays
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Tags: Alastair Darling, Bank of Scotland, British Pound, Budget, Chancellor of the Exchequer, Nationwide, Tax, Tax Cuts, Tax Payer, Tax Time Bomb, UK Credit Cards, UK economic activity, Uk in recession, UK Recession, VAT