According to the latest Confederation of British Industry (CBI) distributive trades survey, the fall in retail sales slowed in October, but only a modest rise in volumes is expected next month.

Consumers continue to be cautious about the economic outlook and rein in their spending on the back of rising unemployment, higher inflation and slow wage growth.

The CBI’s survey established that 36% of retailers saw sales volumes fall during October compared to 25% who saw a rise.

As a result, the balance fell to 11% from 15%.

In the meantime, the expected sales balance for November rose to +4 – the highest since June.

The survey, meanwhile, also discovered that most sub-sectors suffered with falls in department stores, clothing and footwear.

Sales at department store sales fell at their fastest pace since May 2010, while clothing sales fell at their fastest pace since March 2009.

Commenting on the figures, CBI chief economic advisor Ian McCafferty, said: “High street sales remain difficult but the decline has stabilised, and retailers expect there to be some very modest growth next month in the build-up to Christmas.

“Family budgets continue to be stretched … and consumer confidence is severely dented. High street retailers are heavily discounting as they aim to provide the best possible value on basics. But consumers will continue on the back foot as real incomes remain squeezed,” he added.

In related news, the British Retail Consortium (BRC) said stores axed jobs at their fastest pace in two years in the July to September period.

Following a tense summit in Brussels last night, it has been announced that euro zone leaders have reached a deal which they say will help resolve the growing debt crisis in the 17-member nation.

The deal will see the euro zone’s main bailout fund expanded to €1 trillion, while banks will accept a loss of 50% on Greek debt in exchange for recapitalisation.

European shares gained following the news while the euro was higher – up 1.3% against the dollar to $1.4005.

There have been fears that the debt crisis could spread to weaker nations, such as Italy and Spain.

Prior to yesterday’s summit, British Prime Minister David Cameron said one of his goals is to stop the “contagion” of the euro zone crisis from spreading to Britain.

Today, the Prime Minister welcomed the deal and said: “They made very good progress. They need to keep up the momentum and work urgently to fill in the remaining detail.”

Meanwhile, Chancellor George Osborne said the euro zone now appeared to be on the “right road”.

Bank of England policymaker Paul Fisher has today said Britain is likely to suffer another recession.

His comments come just a few days after fellow Monetary Policy Committee (MPC) member, Martin Weale, warned that a contraction in the fourth quarter is possible.

Returning to Mr Fisher, he was asked how likely a double dip recession was and he replied: “I think it is a significant chance.”

However, Mr Fisher told Bloomberg TV that the recent announcement by the central bank to inject a further £75 billion into the economy via its quantitative easing (QE) programme, should help prevent a recession.

He said: “Hopefully it will put some confidence, some dynamism, back into the economy to help support it going forward.”

He also highlighted that the Bank of England was prepared to introduce more QE if necessary.

However, earlier this month, leading think tank, the Ernst & Young Item Club, warned that the latest round of QE is unlikely to boost the recovery.

Its comments came just a week after the British Chambers of Commerce (BCC) said the fresh round of QE may not be enough to prevent the economy from slipping back into recession and “more radical measures” are required.

Britain’s last recession ended in mid-2009 but since that time, the economy has hardly grown and many leading business groups continue to download growth prospects for the economy.

Unemployment is rising, while inflation continues to surge which is hitting consumers’ ability to spend and this is impacting negatively on the economy.

In the meantime, fellow policymaker Adam Posen, is also pessimistic about the economic prospects and said growth is set to remain very weak.

The world’s largest economy expanded at its fastest pace in a year in the three months to the end of September, official figures revealed today.

According to the Commerce Department, the US economy grew at an annualised rate of 2.5% in the third quarter of this year.

The figure was in line with forecasts but was a considerable improvement on the 1.3% growth reported for the second quarter.

Today’s figures will be a welcome boost for the economy which looked set to be heading towards a double dip recession just a few weeks ago.

The strong performance was due to a rise in consumer and business investment spending, as well as international trade.

Consumer spending was the strongest since the fourth quarter of last year, while business spending was the fastest in over a year.

Consumer spending is closely monitored as it accounts for more than two-thirds of economic output.

However, despite today’s encouraging figures, it appears that consumers are still wary about the future direction of the economy.

Earlier this week, the Conference Board revealed US consumer confidence slumped in October.

The closely-monitored Consumer Confidence Index from the Conference Board dived to 39.8 this month from September’s reading of 46.4.

Not only was the reading less than forecasts of a level of 46.0, it was the lowest since March 2009, when the US was in recession.

The economic recovery in the US has so far been sluggish in the face of higher unemployment and a depressed housing market.

Today, however, a separate report from the Labor Department revealed new claims for state unemployment benefits declined by 2,000 last week to a seasonally adjusted 402,000 – suggesting a steady improvement in the labour market.

In addition, yesterday a report suggested house prices were stabilising.

According to the Confederation of British Industry (CBI), confidence among UK manufacturing firms has slumped as a result of the debt crisis in the euro zone, as well as a fall in expectations for future growth.

The latest industrial trends survey by the employers’ group established that 30% more businesses were pessimistic about the future than optimistic, while companies expected a fall in orders, output and staff.

The combined order book for the companies surveyed dived to -18 in October from -9 the previous month – the lowest level for a year.

Furthermore, expectations for output in the next quarter slumped to -11 this month from +9 in September – the lowest level since July 2009.

The latest report has fuelled concern that the UK economy may be headed for a double-dip recession.

Commenting, Ian McCafferty, the CBI’s chief economic adviser, said: “Manufacturers saw modest growth in orders and production over the past quarter.

“However, sentiment has deteriorated sharply and firms expect sizeable falls in activity over the next three months. The quarterly fall in sentiment is the largest since the height of the recession in mid-2009.”

The figures are based on the CBI’s quarterly survey of industrial trends, which was conducted between 26 September and 12 October, and questioned almost 450 manufacturing firms.

EU leaders are travelling to Brussels for an emergency summit – the 14th in 21 months – designed to tackle the euro zone debt crisis.

The summit will also see leaders discuss Greece’s second bailout, as well as boosting the €440 billion rescue fund.

There are still growing fears that Greece’s debt crisis could spread to weaker nations, such as Italy and Spain.

There are also doubts as to whether a comprehensive deal will be reached as bigger nations, such as Germany and France, disagree about how to increase the size of the rescue fund.

German Chancellor Angela Merkel said Germany’s prosperity depended on a solution to the crisis, while adding that nobody should expect quick solutions.

Meanwhile, British Prime Minister David Cameron has today said one of his goals is to stop the “contagion” of the euro zone crisis from spreading to Britain.

The PM is preparing to attend today’s summit and said: “Above all, the most important thing is the construction of the firewall of this European fund to prevent contagion taking place elsewhere.”

US consumer confidence slumped in October, the Conference Board has reported.

The closely-monitored Consumer Confidence Index from the Conference Board dived to 39.8 this month from September’s reading of 46.4.

Not only was the reading less than forecasts of a level of 46.0, it was the lowest since March 2009, when the US was in recession.

Furthermore, the index remains far away from the 90 points required to show that the world’s largest economy is on solid footing.

Since the index commenced in 1967, the average reading has been 95.6.

The index hit a record high of 144.7 in 2000, while its all-time low was 25.3 in February 2009, when the country was in the midst of recession.

Commenting on the figures, Lynn Franco, director of the Conference Board Consumer Research Centre said: “Consumer confidence is now back to levels last seen during the 2008-2009 recession.

“Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased,” she added.

Meanwhile, the present situation index, a measure of consumers’ assessment of current economic conditions, fell for the sixth month in a row to 26.3 from a revised 33.3 in September.

The report also showed that households are concerned about future incomes – raising doubt over spending – something which is closely monitored as it accounts for more than two-thirds of economic output.

The economic recovery in the US remains sluggish in the face of higher unemployment and a depressed housing market.

In other news this week, the Standard & Poor’s/Case-Shiller index showed that single-family house prices rose by just 0.2% in August on a monthly basis, while prices were 3.8% lower when compared with August 2010.

Mervyn King, the Bank of England’s Governor, has confessed that the latest round of stimulus is not guaranteed to boost lending to SMEs.

The ongoing lack of credit to SMEs has been a major concern for the Government as these companies are the key to job creation in the UK and are expected to be one of the main drivers of the economic recovery.

Earlier this month, the Bank of England announced it would restart its quantitative easing (QE) programme – a scheme designed to stimulate the economy.

A recent slew of weak economic data had led to speculation that the central bank would embark on its “QE2” programme to boost the economy.

The Bank recently pumped a further £75 billion via its QE scheme after injecting £200 billion into the economy in November 2009 in an attempt to boost lending by banks.

QE, also known as printing money, is a process used for buying Government bonds or other financial assets.

However, Mr King has today told the Treasury Select Committee that banks are under pressure from investors to reduce their loan books and that the extra £75 billion may only prevent banks from reducing lending even further.

He said: “I can’t guarantee that it means that bank lending will rise. But I do believe that it won’t fall as far as it might otherwise have done.”

He added: “I think the action will make a difference to the amount of lending, but it certainly doesn’t guarantee that lending to the real economy is positive.”

Meanwhile, many have suggested the latest QE boost could drive inflation up further – which is already running at 5.2% – a 3-year high.

However, Mr King denied this but acknowledged that families are facing a “real squeeze” on their income.

Finally, Mr King was subject to some criticism for not re-introducing QE months ago but he said the Committee believed developments in the euro zone and the global economy meant “we do what we feel is appropriate at the time.”

The Reserve Bank of India (RBI) has today raised key interest rates for the thirteenth time since March 2010, in a bid to tame stubbornly high inflation.

The central bank lifted its main rate to 8.5% from 8.25% as inflation soars on the back of higher food and fuel prices and the measures were widely expected.

Figures recently revealed India’s wholesale price inflation rose to 9.72% last month on an annual basis – significantly above the central bank’s target of between 4% and 5%.

This represented the tenth consecutive month that inflation has been above the 9% mark.

Inflation reached a two-year high earlier this year of 10.16%, after food, fuel prices and manufactured goods surged – the highest among the Group of 20 leading nations.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line in the country.

However, economists say that the RBI has a difficult task to bring inflation down amid signs of slowing growth.

Prime Minister Manmohan Singh has previously said inflation is a “serious threat” to the country’s growth.

It is currently the world’s second fastest-growing major economy, behind China. However, the central bank has slashed its growth forecast from 8% to 7.6% for the fiscal year that ends next March.

In a statement, the RBI said: “Slower global growth will have an adverse impact on domestic growth, particularly on industrial production, given the rising inter-linkages of the Indian economy with the global economy.”

In the meantime, the RBI warned that inflation will remain high in the short-term.

“Inflation is broad-based and above the comfort level of the Reserve Bank. Further, these levels are expected to persist for two more months,” the bank added.

Inflationary pressures are rife throughout the world, particularly in Asia, and many central banks are hiking interest rates in order to tame inflation.

The Markit Household Finance Index (HFI) has today published a gloomy report as families’ finances were slightly worse in October than in September.

Meanwhile, Markit’s HFI, which measures prospects for finances over the coming year, dived to 34.5 this month, from September’s reading of 42.2.

The reading represented the lowest in the survey’s history and remains way below the 50 level which separates improvement from a deterioration in household finances.

Meanwhile the index which measures current finances dipped to 35.0 in October from 35.1 in September – also below the crucial 50 mark.

Tim Moore, senior economist at Markit, comments: “Household finances were once again gripped in a vice of subdued real incomes and heightened job insecurity in October.

“Households also expect a continued erosion of their real incomes next year, despite inflation expectations falling back slightly in October.”

The Coalition Government is in the midst of harsh spending cuts and tax hikes, in order to slash the budget deficit and state workers are particularly worried about their prospects.

Almost two-thirds of public sector workers expect their household finances to deteriorate in one year’s time, with this index plunging to 27.4 in October from September’s reading of 37.9 – the lowest since the survey commenced in February 2009.

Meanwhile, households with a mortgage were pessimistic about the outlook for their finances, with 59% expecting them to deteriorate.

The job security measure fell at the steepest rate in three months and inflation expectations edged lower to 87.3 in October from 90.0 the previous month.

Britons are already suffering from the worst squeeze in living standards in more than three decades as stubbornly high inflation, tax hikes, unemployment and low wage growth eats into families’ budgets.

Inflation is currently running at a 3-year high, while unemployment is at a 17-year high.

The Markit survey comes days after the Nationwide Building Society revealed a fall in UK consumer confidence for the month of September.

The building society’s consumer confidence index fell for the fourth consecutive month, falling by 3 points to 45 in September – hovering dangerously close to the all-time low of 41.

According to the survey, 80% of consumers believe there will be no improvement in the economy over the next six months.