Londoners slam brakes on spending

LONDON'S love affair with shopping came to an abrupt halt last month, with retail sales growth going into reverse.

A report from the London Retail Consortium and KPMG shows like-for-like sales in September were 0.8% lower than a year ago, a sharp reversal of the previous month's 4% gain.

It was the first time in three months that the capital's retailers performed worse than the national average. Nationally, sales were up 2%.

The report puts some of the deterioration down to there being fewer American tourists than a year ago and says the weak dollar hit their spending.

Retailers reported slow growth in leisure goods and a return to 'payday' spending. Sales of big-ticket electrical goods also fell.

However, LRC director David Southwell said: 'One month's weak figures do not justify any apocalyptic sentiment. After the recent strength of sales in London, retailers will be hoping that this was down to consumers taking a pause for breath before Christmas rather than the start of a long-term down trend.'

While London's economy has so far bucked the national trend of a growth slowdown, recent reports have indicated it is coming off the boil.

Lloyds TSB said the number of firms in the capital reporting cashflow difficulties is rising and the British Chambers of Commerce said confidence on future profits has slumped.

Today, the Ernst & Young ITEM Club forecast London's growth would underperform the national average over the next two years. It has pencilled in a UK figure of 3.3% for this year and 2.8% for 2005.