High street's worst month

London's retailers have suffered their worst month for at least five years, figures reveal today.

Despite taking in two bank holiday weekends, statistics for May show the capital's stores have borne the brunt of the slowdown in consumer spending.

The number of people visiting London's main shopping centres and high streets last month slumped to its lowest in the new millennium, according to figures from retail monitor SPSL.

On a year-on-year basis, there were 5.2 per cent fewer shoppers in London compared with a decline of only 0.5 per cent across Britain as a whole.

The figures are the first sign that the capital is being hit hard by the high street misery devastating the rest of the country's retail sector.

Up until now, London stores have been protected from the worst of the downturn thanks to continuing spending by high-earning residents and tourists.

But it now appears debt-laden Londoners are reining in their expenditure in response to higher interest rates and a stagnating property market. Dr Tim Denison, director of knowledge management at SPSL, said: "For the first time in recent years, consumers are electing to pay back some of their outstanding credit card debt rather than go out shopping and add to it.

"This change in discretionary spend is strong evidence that the consumer is finally feeling the strain of more than a trillion pounds of debt and is finally taking

action to get to grips with it."

His comments were backed by figures from the Bank of England today which showed credit card borrowing rose by only ? 316million in April, the smallest increase for nearly four years.

Meanwhile, HBOS became the third high street bank in a week to warn of rising levels of bad debts.

It followed Barclays and HSBC in warning there had been a rise in the number of borrowers who are in arrears on their debt repayments - a sign that consumers are struggling to cope with massive borrowing and higher interest rates.

Today's report will add to mounting fears the economy is faltering. Not only is the retail gloom deepening, but the battered manufacturing sector is sliding closer to recession.

Many City experts believe the Bank of England will cut interest rates in the summer to give the economy a boost.