High street boom `not a return to the late 1980s'

Spending on the high street last month was the most buoyant since November 1988, at the height of the Lawson boom, according to a survey published yesterday.

The Confederation of British Industry played down the parallels with the late 1980s, saying there was no need for the Chancellor to clamp down by raising interest rates.

Alastair Eperon, chairman of the CBI's distributive trades panel, said: "We are not seeing the 1980s boom conditions here at all. Consumers are still being very careful and still shopping around."

Even so, a higher proportion of retailers reported price rises than at any time since May 1993, while employment rose at the fastest rate since 1989. Prices were higher across the board.

Mr Eperon said the price balance remained low by historical standards. "Evidence from retailers suggests that the reported pick-up in selling prices is from a low base and reflects earlier cost increases."

The 53 per cent balance of firms reporting a year-on-year increase in sales was significantly higher than in July, although boosted by depressed sales last August. Retailers expect a further advance this month.

Volume increases compared with a year earlier were strongest in clothing and footwear and housing-related stores. In furniture and carpets, the balance leapt to 100 per cent, with every respondent to the survey reporting an increase in sales.

Some economists found in these figures a strong echo of the last boom. Robert Barrie, at brokers BZW, said: "We didn't see it coming in the late 1980s. The fact that most of us are not forecasting it now does not mean it will not happen again."

He said the survey suggested the labour market would start to tighten and cost pressures would increase.

Interest rates remained unchanged yesterday after Wednesday's monthly meeting between Chancellor Kenneth Clarke and Eddie George, Governor of the Bank of England.

Separately, Adair Turner, director general of the CBI, warned the Chancellor against using spending cuts to finance budget tax cuts.

"The one thing that isn't so good about the short-term outlook is the state of public finances," he told CBI Scotland's annual dinner in Glasgow.

"Public borrowing forecast for next year, even before any tax cuts, will still be at the level where national debt rises as a percentage of national income. Borrowing has to be kept on a steady downward path, not allowed to slip and then be corrected with a jolt later."

Separate figures showed a dramatic decline in the number of receiverships and administration orders last month, according to accountancy firm Deloitte & Touche. There were 122 orders during the month, 34 per cent down on July and 29 per cent below the level a year earlier. The biggest drop was in London and the South-east.