It’s that time of year for peeping over the parapet to stare at the new year.The trouble with predictions is that so often the reality turns out to be much wilder than the forecasts.

It’s that time of year for peeping over the parapet to stare at the new year.

The trouble with predictions is that so often the reality turns out to be much wilder than the forecasts. After all, who would have suggested this time last year that Downing Street would be cohabited by the caring couple of Cameron and Clegg, cutting benefits and raising student tuition fees to the cost of a family car?

Anyway, here are some thoughts on next year. Goldman Sachs is projecting a healthy 2.5% GDP growth, at least in line with long-term trends, although the OECD recently cut its forecast to 1.7%. GDP growth is being helped by booming exports, so the more relevant number for retailers is domestic demand growth, which Goldman Sachs forecasts at 1.7%. That’s nearly 1% behind the long-run average of 2.6%. Inflation is forecast at 2.5%, but half of that is probably just the VAT increase.

So a weak, and probably uneven, recovery looks likely next year. As interest rates look set to remain low, the middle class, mortgage-paying sector - at least those not afraid of losing their jobs - will remain good retail customers. That should bring a smile to John Lewis, Sainsbury’s and Marks & Spencer.

However, those customers who rent, or live off savings or fear unemployment, or become students, will continue to find life tough. This should ensure continued strength in the value retail sector, but perhaps punish competitors positioned between hard value and the middle classes. Expect to see continued high levels of promotions from these retailers to compensate.

Low interest rates will, of course, help retailers funded by bank debt, provided that they don’t need to refinance any of that, as the credit crunch is unlikely to ease much next year. Refinancings are being inevitably accompanied by steps-up in interest costs, as banks rebuild balance sheets (and bonuses).

The current credit squeeze has restrained private equity, but not stopped it completely. There is still a lot of money in private equity funds looking for a home. We’ve seen a few deals this year, notably Pets at Home, HobbyCraft, Poundland and Mountain Warehouse. There are also a number of private equity-owned retailers that could be for sale next year; the perennial bride New Look, Maplin, and perhaps Fat Face. On recent experience, these may well be bought by other private equity firms, as the IPO market remains uncertain and public investors remain wary of private equity offerings.

In this economic situation, it’s likely to be only quality retailers that actually get sold, whether to public or private shareholders.

I don’t mean premium retailers, but those that are in growing markets, differentiated from competitors, and aren’t threatened by the internet or hypermarkets. Importantly, it’s those that can live through the current sluggish economy to blossom in the long-awaited, but still distant, recovery.

Simon Laffin independent retail adviser and non-executive director