LAST week was a painful reminder for investors that the UK stock market can quickly change its focus. The overriding concerns are political instability in Europe and the impact that may have on future policy.

The call is for a focus on growth over that of austerity and there is a pull of wills at the highest level.

This is the latest stage in the European saga and it is possible that the situation may rumble on for some time to come. The FTSE 100 Index has moved sharply lower since the beginning of May in response to the situation across the channel.

When looking closer to home, the UK economy is also in a fragile position and one sector which has continued to struggle is high street retail. The sector tends to have a greater focus on the UK consumer and it can act as a barometer reflecting shopping habits.

It is fair to say that the trading environment on the high street remains tough and a number of prime shops in Eldon Square remain empty. In addition, some of the previous incentives, such as the relaxation of Value Added Tax (VAT), have been reversed.

In this environment the weak tend to go under while the strong get stronger. Towards the end of March it became clear that Game Group was in trouble. The company suffered a terrible Christmas with a significant fall in revenues. As the problems began to spiral providers of the leading computer games refused to supply new titles to the business and Game filed for administration. Competitor HMV has also been overshadowed by falling sales and has renegotiated its bank lending to provide additional finances. It is likely HMV is facing greater competition from online retailers such as American giant Amazon which has embraced the internet as part of its culture.

However, it is not all bad news as UK clothing business Next has moved from strength to strength. The business does not focus on cutting edge fashion trends, in contrast to Supergroup’s approach, and Next does not pile it high and sell it cheap like AB Food’s retail division, Primark. The group has a broad appeal across age ranges and complements the high street shopping format by adding value through a successful on-line business. A key theme for Next has been an emphasis on delivering steady returns whatever the market conditions and this was highlighted in the company’s full year numbers. Woman’s wear in particular delivered a good performance with the aim of providing ‘what the customer wants’.

It is easy to overlook the retail sector from a top down point of view and conclude that, since economic uncertainly is prevalent and times are difficult on the high street, all retailers will struggle. However, this is not true and it is fair to say that when the tide goes out the best firms are standing on the shore while the competition is washed away.

:: Anthony Peart is assistant director at investment manager Brewin Dolphin in Newcastle