Carefree 18 to 24-year-olds who do not have a mortgage and have never known a recession are the best hope for retailers. The under 25s are five times more likely to increase their spending this year compared with those over 35, according to research from PricewaterhouseCoopers, the accountancy firm.

While Woolworths and MFI went under, fashion-led stores are performing better, as they serve people free of mortgages and family commitments.

Nick Robertson, the chief executive of Asos, the online fashion retailer, said: “Young fashion held up in the last recession. [Under 25s are] less likely to be made redundant and not encumbered by utility bills. They’re still going on their Ibiza holidays and need clothes to wear on them.”

Nearly one in four 18 to 24-year-olds intends to spend more than last year in the January sales, according to a survey by PwC, and a similar proportion believe they will be better off in 2009 despite the wider economic problems. A higher proportion of the under 25s – about four out of ten – do fear they will be worse off next year – but that is dwarfed by the pessimism among older generations. Seven out of ten people aged over 45 believe they will be worse off next year.

The retail sector is braced for a brutal January, as it suffers from the fall-out of a Christmas period in which discounts cut deep into profit, just as rent demands arrive and the banks decide which stores they will continue to back this year. The next four months are expected to bring 440 retail failures, according to Experian, the consultancy.

But in the week before Christmas, as the number of shoppers elsewhere was down by as much as 12 per cent, the West End of London reported that footfall had risen sharply, thanks in part to European visitors. The New West End Company reported that at least 10 million overseas shoppers visited Oxford Street and its environs over Christmas.

Andy Garbutt, retail director at PwC, said: “Young shoppers and tourists are bringing a boost to the high street and there are retailers out there still performing well.”

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts