The difficulties on our high street were laid bare yesterday when the owner of the Argos chain said that sales of TV’s, iPods and audio equipment had fell by up to 25% over March and April. This news also coincided with a major survey showing that 40pc of consumers had made “significant” cutbacks since the start of the year, with British consumers instead focussing on paying off debt.

The current situation is rather ironic as the government are promoting the need to save more and live within our means. The only problem with that is by not over indulging on our credit card, the service sector is be negatively impacted, which is by far the largest area of our economy and crucial for overall economic growth. The weakness in this sector however is unlikely to change in the near future with the ramifications from the largest debt driven consumer spending binge in British history likely to be felt for a long time.

Across the pond in the US, fears are also rising after a raft of disappointing data releases. The highly respected US economist Robert Shiller is quoted this morning as saying the US was at risk of a double dip recession. The S &P/Case Shiller Index of US property values, which he co-founded, has falling 4.2% in the first quarter of 2011 and a further fall of 25% would “not surprise to him at all”. When you consider the implications if your home was to fall a further 25%, it gives you a sense of the gravity of the problems the US could face.

In morning trading fears over the health of the world economy provided support for the US dollar as the main ‘safe haven’ currency, with the pound trading at 1.6276 against the greenback. The euro was also slightly weaker against the dollar at 1.4485 as investors sold their Euros.

After weak UK manufacturing and industrial production figures this morning the pound gave back some of ground gained against the euro yesterday to trade at 1.1240. Let’s hope next week is a little more positive on the data front with UK consumer confidence, inflation, retail sales and unemployment figures all released next week.