London's retailers hit festive jackpot

The London Retail Consortium said sales were up an impressive 7.1% last month - compared with growth of just 0.3% in the UK as a whole. It came despite a fall in the number of people visiting the High Street as cautious Londoners showed some restraint.

"Continued sales growth despite the decline in footfall further confirms anecdotal evidence of people making fewer shopping trips but spending more on each trip," said Joscelyne Hynard, a senior analyst at the British Retail Consortium.

The New West End company, which manages Oxford Street, Bond Street and Regent Street, said its members saw shopper numbers rise 2.2% in December, bucking the trend elsewhere in the capital and across the country, where the figure was down by 9.5%.

Jace Tyrell, manager of New West End company, said: "It is almost like London is a little bubble away from the rest of the UK. Despite the current economic climate and predictions of slowdown in consumer spending, footfall in the West End for December was good."

An influx of tourists from Europe boosted sales, particularly towards the end of the month after the school holidays started, although the weakness of the dollar continued to put off visitors from the US.

Helen Dickinson, head of retail at KPMG, said: "The centre of the capital has shown itself capable of continuing to draw in customers, as well as tourists, and increase like-for-like sales. This is at odds with what we have seen over the country as a whole."

The strong trading figures came despite fears about the state of the economy, which is forecast to slow sharply this year in the wake of the credit crunch. The Bank of England cut interest rates in early December for the first time in more than two years, and is likely to act again in the coming months as the housing market and consumer spending slow.

The rate cut may have tempted some shoppers out in the build-up to Christmas while heavy discounting also encouraged people to spend. However, sales growth of 7.1% in December was below the increase of 9.8% in December 2006 and 8% in 2007 as a whole. There were a number of high-profile casualties on the High Street at Christmas.

LRC director Kevin Hawkins said: "While London's retailers bounced back at Christmas from November's worst performance for two years and significantly outperformed retailers in the rest of the UK, weaker growth than December 2006 shows they were also hit by the severe pressure on customers' personal finances.

"London retailers discounted early and deep to tempt hard-pressed consumers in - great for bargain-hunters but an indication of a very tough start to 2008 for those retailers being squeezed between rapidly rising costs and falling shop prices."