Retail sales grew by 0.8 per cent on a like-for-like basis compared with May 2009, and total sales rose by 3 per cent. In April, sales fell by 2.3 per cent compared with the same period in 2009, according to research from the British Retail Consortium (BRC).

Stephen Robertson, director general at the BRC, says: ‘The run-up to the World Cup helped sales of televisions, though this was largely discount-driven. With the tournament getting closer, there should be a further uplift to other football merchandise such as flags and replica kits.’

However, Howard Archer, chief UK & European economist at financial analysis firm IHS Global Insight, says consumers are still reluctant to spend: ‘This is hardly surprising given the serious headwinds that they currently face, which are about to be intensified by the looming major fiscal squeeze which the government is making clear will affect everyone.’

Despite a possible uplift from the World Cup, Archer is negative about the long-term outlook: ‘We believe that consumer spending will be limited for some time to come, which does not bode well for overall growth prospects given that [it] accounts for some 65 per cent of GDP.’

The BRC is warning that as many as 163,000 jobs could be lost in the next four years if VAT is increased.