Retailers plead for rate cut

Hard-pressed retailers were last night demanding an immediate cut in interest rates from the Bank of England after the CBI reported that conditions on the high street were at their bleakest for more than two decades.

Amid reports of weak consumer demand, weak profits and early summer sales, the employers' organisation said that it could not find a worse month for retailers in the 22-year history of its distributive trades survey

The CBI called an unscheduled press conference to report that consumer belt-tightening meant 42% of retailers saw business in June down on a year earlier, while only 23% said it was up.

Although it stressed that business a year ago had been boosted by Euro 2004 and good weather, the CBI said the longer-term trend was also poor and there was no hope of an early respite.

A big event such as this weekend's Live 8 concert is likely to result in a quiet weekend for retailers, said research company FootFall. For example, the rugby world cup final in November 2003 resulted in a drop of 9.6% compared with the same day a year earlier.

Consumers were likely to benefit from early and deep summer sales as retailers sought to clear excessively high stocks of unsold goods, it added.

With the Bank of England due to decide on interest rates next week, news of the tough conditions in the high street added to mounting pressure on the monetary policy committee to announce the first cut in the cost of borrowing in two years.

A breakdown of the CBI's monthly snapshot of spending showed that sectors vulnerable to the cooling housing market suffered particularly badly in June, with only food stores bucking the trend.