It's official - the UK retail boom is over

Retailers have finally bowed to the inevitable and admitted that the consumer spending boom that pushed sales growth into double digits is over.

The British Retail Consortium (BRC) has voiced publicly what many chief executives have been saying privately: no amount of price-slashing and margin squeezing can combat teetering confidence in pensions and jobs.

The organisation, which represents all the major high street traders, says Tony Blair must intervene to restore faith in the yo-yoing stock market to head off a full-scale panic. They fear consumers are so worried about the future of their equities-linked savings that what ought to be a measured spending slowdown could turn into a disaster.

'Retailers are resigned to the fact that we are not going to see double-digit growth or anything like that,' said the BRC's director Bill Moyes. 'The worry is about confidence in the stock market. That could lead to a sudden retrenchment as people stop spending on big-ticket items.

'All the messages coming out of government are that people will have to save more for their retirement, and retailers are worried that the messages being sent could produce a panic reaction.

'Confidence is the issue, and the Government needs to be reassuring people that the current stock market situation is an aberration.'

His concern comes despite a survey showing that consumer confidence ticked up in July after hitting a 15-month low in June.

The most recent BRC sales figures showed that the growth rate was almost cut in half last month. Stores including Debenhams, Boots and Sainsbury's published disappointing sales figures last week. Even retailers that reported strong growth, such as MFI, said they believed the buoyancy that characterised the past 12 months is over.

The BRC's chief economist, Bridget Rosewell, who was predicting a further cut in interest rates by the end of the year, said: 'If there ever was a boom for retailers, who had to cut prices and squeeze margins to keep the spending going, it is over now.

'The slowdown in sales growth we are seeing is in line with what we have been expecting for the past few months.'

Retail analysts are warning that the pace of growth could slow more significantly than they were expecting only a matter of weeks ago.

'We harbour concerns about deteriorating confidence going into the second half of the year, even if rates were to move down,' said Matthew McEachran of Investec Securities.

'This is triggered by the turmoil in global stock market conditions. We believe that moderation of growth may be sharper than previously expected, although still not collapsing.'