James Thompson: After festive cheer, retailing faces a hard slog in 2010

Each December for the past two years, Moss Bros has issued a profits warning. Yesterday, the branded suit specialist offered a much more upbeat announcement, saying that its underlying sales for the 18 weeks to 5 December had shot up by 5.5 per cent, while its margins had also risen.

No one is suggesting that Moss Bros is a retail bellwether like John Lewis or Marks & Spencer, and its latest figures contrast with soft sales in 2008. But in many ways the company epitomises what is happening right now on our high streets. In short, many well-run retailers, with little debt, decent products and controlled stock levels are improving their performances. We saw better numbers from Mulberry and even Kent's massive Bluewater shopping centre yesterday too.

The recent collapse of Borders books and First Quench Retail, the owner of Threshers off licences, demonstrates that plenty of hospital cases remain and the retail casualty ward could be active in January. But for the fit and well, the festive trading period is likely to be better than last year.

Even so, on or off the record, most retail chief executives expect a long, hard slog and refuse to be more optimistic about 2010 (notwithstanding Alistair Darling's prediction on Wednesday that the UK economy would grow by up to 1.5 per cent next year).

There are many reasons why the retailers expect a bumpy road ahead. The negative impact of VAT going back up to 17.5 per cent on 1 January may prove temporary and largely psychological, but it is likely to depress spending on big-ticket items in the new year. In the short term, unemployment may not rise much further than its current 2.5 million, but joblessness may remain stubbornly high and get a further jolt upwards when the next government is forced to take an axe to public-sector jobs.

In addition to increases in national insurance, aggressive wage caps will remain a fact of life for the next few years in both the public and private sectors. And the current relative leniency of banks towards struggling retailers who breach covenants may not extend all the way through 2010.

Having said that, one factor which is harder to gauge is the continued resilience of Britain's shoppers, many of whom are as committed to retail therapy as they are to The X Factor. Given the possibility of normal weather patterns, a sharper than expected upturn in the economy and housing market, and a massive summer feel-good factor should England win the World Cup, 2010 could, with a fair wind, turn out to be a lot better than many chief executives fear. Here's to hoping.