London businesses hit by downturn

BRITAIN'S economic slowdown has spread to London, new research shows.

Retailers' sales suffered in May, while overall business activity slowed to its weakest for nearly two years as growth in new orders eased. The findings suggest London's economy, which had been protected from the worst of the consumer downturn, is now being hit.

Retail sales last month were 0.5% lower than a year ago, according to the London Retail Consortium. Though that was less severe than the 2.4% fall seen across the country, it was the worst performance since December and a sharp deterioration from April's 3% gain.

LRC director Kevin Hawkins said unpredictable weather had played a part in the decline. April's dry, sunny conditions had brought shoppers on to the High Street and boosted sales. Big-ticket, housing-related items such as furniture, TVs and hi-fis were hardest hit.

'Many retailers will be disappointed, but it clearly highlights the vulnerability of the High Street,' said Hawkins.

Meanwhile, the latest snapshot of London's economy by Royal Bank of Scotland showed business activity grew faster than the national average in May, but eased to its weakest since July 2003.

The survey's headline index registered 56.3, well above the 50 'no change' level but down from April's 58.7. Service-sector firms continued to hire new staff, but manufacturers laid off workers.