The rain poured down on the Jubilee weekend, but still a nation turned out in its millions to mark the Queen’s long-standing service.

The rain poured down on the Jubilee weekend, but still a nation turned out in its millions to mark the Queen’s long-standing service.

Spirits were dampened little by the drenching.

If anything, the rain gave the event a quintessentially British feel, a chance to demonstrate national resolve and celebrate no matter the adversities faced. The question now for retailers is whether these extraordinary few days were merely a respite from reality or mark a more fundamental and positive shift in the consumer outlook.

It is hoped the start of Euro 2012 this weekend, followed quickly by the Olympics, will help build some momentum behind the feel-good factor. And, despite the UK’s fall back into recession, there are signs that confidence in the economy has not taken the hammering many feared.

In fact, according to GfK, consumer confidence increased month-on-month in May. The driver was how people felt about future prospects rather than their current predicament and the figures still linger around historic lows, but the shift is a welcome surprise nonetheless.

There’s encouraging news too for consumers on inflation. While overall shop price inflation increased to 1.5% from 1.3% in April, as retailers struggled to maintain eye-watering discounts, food inflation showed signs of stabilising as easing commodity prices helped combat rising property and distribution costs.

But for every ray of hope there remain plenty of dark clouds. The collapse of the Eurozone is still an abstract concept to most shoppers, but the threat of a Greek or Spanish meltdown hangs over the markets, with the potential for a shock to the global financial system that would dwarf the fallout from Lehman Brother’s collapse.

While this prospect remains so real, business confidence in the wider economy will continue to be strained, stymying investment and leaving the medium-term future of UK retail as unsettled as the weather.

A multichannel future

Aurora Fashions and sister business Karen Millen have become the first retailers to launch PayPal’s mobile payments service in-store. It is an example of the high level of innovation these difficult times have sparked. The immediate audience will be marginal but it shows how technology can be leveraged for the medium term to engage with consumers in ever more convenient ways.