If Britain's leading retailers prove as adept at managing the downturn as they have been at managing expectations, then investors have much to look forward to.

Marks & Spencer's figures yesterday were truly grim. Sales in the UK were down 7.1 per cent excluding new stores in the last quarter, despite its two 20 per cent off “spectaculars” before Christmas.

On the clothing and general merchandise side, sales were down almost 9 per cent. But this was less dire than analysts had forecast and M&S's shares bounced, as have several other big retailers that have reported this week.

There were some positive signs, however. Food sales down 5.2 per cent were a bit stronger than expected, with Sir Stuart Rose, the retailer's executive chairman, claiming that its performance had bottomed out after the recent change of management.

He insisted that the concerns about M&S's Simply Food convenience stores were misplaced, despite the sale of 25 outlets that proved too small to offer a decent range. Some analysts argue that the Simply Food stores are particularly vulnerable in current conditions, given their high prices. But Sir Stuart said that they had performed no worse than bigger shops in the chain.

The truth is that M&S's market position means that it is going to have a rough recession and Sir Stuart knows it, which is why he is proposing to slash head office staff by 15 per cent.

Shoppers will trade back up from Greggs' sausage rolls in due course. But it will be a good while before they all return for the scallop and chorizo potato rosti.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive