Retailers are already struggling with the reduction in consumer demand. Given that nearly all of their merchandise is sourced internationally the weakness of the pound will be squeezing margins even further. With demand likely to contract for another 6 months at least and with credit lines difficult to come by, only the best will survive unscathed.

With the news filled with ever increasing doom it does not take a great leap of imagination to forecast that the high street may get even worse.

The year end rally of 2008 now seems to be a distant memory. The FTSE was riding high at 4680. Whilst the majority of the falls in the FTSE have been bank related I find it difficult to believe that where the banks go then many other stocks will not follow.

As Gordon Brown spoke to journalists about a new State bail out package it became obvious that shareholders were the least of this Government's worries.

It is difficult to digest, but in the very long run, the Government may be correct. Having said that, in a capitalist dominated democracy the destruction of investment savings over the last year or so will probably take a decade to replace. Pensions will give pitiful returns this year affecting long term plans and necessitating longer working life spans. This may also have implications for increased long term social security aid to newly impoverished near retirees.

With optimism so low, are there any benefits for traders out there looking to buy and/or sell the markets? By mid-January 2009, the market volatility of 2008 had returned and for anyone by trading ranges there was, and still is, money to be made. Of course you must be careful when trading ranges. When the markets breakout of a range that can really hurt.

While the entire UK economic situation seems to be pretty dire it must be remembered that some 70% of the revenue is made overseas. With the pound deteriorating this may mean that profit margins on foreign earnings get a significant boost and the value of UK stocks in euro and dollar terms start to look ever more attractive.

The current bear market probably has more to do. However, if even a modicum of optimism returns to the markets, they may well move sharply higher very quickly.

Note that spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.