Marks & Spencer chairman Sir Stuart Rose today predicted that consumer spending would not falter as a result of government spending cuts which were “fair to everybody”. Speaking at a retail conference in Berlin he said: “I think consumer spending is strong enough to cope. We’ve got cuts coming through but they are not all happening on 1 January, they are being spread throughout next year.

The retail veteran, who spoke at this year’s Conservative party conference, said he believed consumers “wanted clarity” and the chancellor of the exchequer had given them “absolute clarity” last week. That insight, he said, would enable Britons to plan for the future, which would in turn breed confidence.

But UK retail sales have fallen for the last two months, fuelling fears that the economic recovery is running out of steam. Rose blamed the dip on uncertainty ahead of the cuts announcement as well as warmer weather. This time last year a cold snap gave retailers a sales fillip as consumers bought jackets and knitwear.

Rose said he was in the “glass half full” camp, adding: “I think Christmas will be OK – then everybody has got to put their front foot forward. I think retail will continue to grow (in 2011). It will be exactly what we have seen this year – the weak will get weaker and the strong will get stronger.”

Others in the sector are less bullish about the outlook with Deloitte strategic advisor Richard Hyman predicting UK retail sales could fall 2% next year as the impact of the austerity programme begins to be felt. “I think this is the calm before the storm, From where I am sitting a 2% decline is very possible for next year.”

According to official data retail sales to date are tracking below 2009 and Hyman argues the businesses will struggle to replace all jobs lost from the public sector. Rose was one of the 35 business chiefs who signed an open letter backing the Coalition’s cuts in public spending.

“I was a cutter, an early cutter,” he said. “I fundamentally believe sooner is better than later. I understand the dangers and the difficulties but I thought George Osborne articulated it and so did David Cameron ‘let’s try and be fair to everybody but let’s do it and get on with it’. I think we will move forward and get to the end of 2011 and say that was tough but we are in a better place.”

Most analysts believe consumer spending will hold up during the key Christmas trading period when retailers make the bulk of their profits but falter in the new year. In addition to weakening demand retailers are juggling rising production costs in China and raw material price increases, such as the recent spike in the cotton price.

Carl McPhail, the chief executive of fashion chain New Look estimated its prices would rise by an average of 4% in 2011 as it contended with inflation in its supply chain. “There is price inflation coming through and we will need to pass some of that on to consumers,” he said.

“After Christmas the VAT rise will kick in so a lot of people will bring forward their spending on big ticket items which could mean quite difficult conditions in the early part of next year.” Rose, however, was confident that UK was not headed back into recession as unlike in previous economic downturns, the world was being helped by the strength of emerging markets.

“I don’t think there will be a double-dip. Ten or 15 years ago, if the world went into recession we all waited for America to start up again. But we are no longer reliant on the US locomotive to pull us out of recession, we’ve got the BRICs and Europe pulling together in the Eurozone.”