Next week will show whether most of us are opting to forget our troubles — and in many cases fears for the future of our jobs — and deciding to eat, drink, and be merry this Christmas, come what may.

Locally, retailers seem cautiously optimistic, while nationally, chains are slashing prices to force takings up above last year’s figure.

Graham Jones, of the Oxford High Street Association and pressure group Rescue Oxford, said: “Its too early to judge what takings will be. You never really know that till the first week in January. But I think Christmas sales will be pretty good this year.”

He added that in order to encourage customers to cheer themselves up by spending their money in Oxford shops, more than 25 largely independent stores would get together this evening to offer discounts, along with mulled wine and mince pies.

He said: “With the after-effects of the recession and VAT going up in January, I thought it was time to give Oxford a boost.

“There will be a tremendous number of offers and these are largely independent stores from across the city centre, including the covered market.”

Jonathan Pearson, managing director of Boswell’s department store in Broad Street, said: “We wanted to create a special shopping event and chose Thursday because it is traditionally late-night shopping.

“It is the independent and small chains that make Christmas shopping in Oxford special.”

He added that sales so far this year had been up on last but that he was not “100 per cent confident” this would still be the case by the end of 2010.

June Suliman, co-owner of the Rainbow and Spoon Boutique in Frideswide Square, said: “The event is a very good idea. We all need a bit of help as everyone is cutting back and making do.”

Richard Alden, of Hayman’s Fisheries, which has a store in the Covered Market and another on the Osney Mead Industrial Estate, said he hoped food sales would be helped by the trend for families — now more widely dispersed than in former years — to have more than one feast between Christmas and New Year.

He said everyone was keeping their fingers crossed, but he personally was a “glass-half-full man”.

With Lord Young’s recent remarks about consumers “never having had it so good” still reverberating down the corridors of power, many analysts were loath to comment on the fact that some of us who still have jobs may have more, not less, cash to spend this year.

But Dr Jonathan Reynolds, of Oxford University’s Institute of Retail Management at the Saïd Business School, said: “Perception is everything, and consumer confidence is down. There are more pessimists than optimists about and many people are postponing major purchases.”

He said that household spending fell £20 last year to £450 a week as people saved their money for possible rainy days ahead, and pointed out that by pooling resources larger families saved most — it being cheaper to live together.

But he also said that with families becoming more fragmented, and travelling longer distances for Christmas and New Year reunions, many households were planning to have several celebrations, which could boost food sales.

He added: “Some stores are recognising this trend by offering ready meals at £10 for two.

“And on the non-food side, some people are thinking to themselves ‘buy it now’ before VAT goes up.”

But one feel-good factor could be missing this year — the one engendered in home-owners for so long in the past by the seemingly relentless rise in the price of their greatest asset, their house.

Dr Reynolds said: “Again, it is all down to perception. The big test will come on Saturday, December 18; that is the big day. It seems that even when families cut back on present-giving, they still go on giving to the children.

“And in the past it has been shown that when times are hard people still try and cheer themselves up at Christmas. And so-called Black Monday this week, when many people bought online, was pretty good.”

But he agreed no-one really knows the truth about how sales have gone until about a week after Christmas.

Uncertainty continues in the local economy, with Mr Jones pointing out that tourism had held up well in September but that October and November had been less good.

On the national front, the Confederation of British Industry warned in the November British Retail Cosortium Economic Briefing Report that even if Christmas sales are high, harder times could be ahead as the VAT increase — starting on January 4 — bites.

It said: “High street sales growth held up well in November, and retailers are hopeful that the run-up to Christmas will be just as strong. However, looking into the New Year, retail sales growth may lose some of its sparkle as consumers rein in spending after Christmas.

“Confidence remains fragile. . . a combination of weak wage growth and high inflation is eating into household incomes.”

Other ominous news from researchers was that food inflation is rising. In the supermarkets it went up by by 4.4 per cent in October, according to a BRC-Nielsen survey, leaving less money to spend on discretionary goods.

And the grocery price rises are there despite the level and depth of in-store promotions being at record highs.

Dr Tim Denison, director of retail intelligence and retail psychologist at analysts Synovate, said in the report: “Food inflation is unwelcome news for non-food retailers, especially in the run-up to Christmas and with the VAT increase just around the corner. It is particularly worrisome to high street fashion retailers, themselves facing record high cotton prices.

“With suppliers already having been squeezed hard, there are few cards for retailers to play over the coming months. We can expect to see the high street snow-deep in promotions over the winter to stimulate demand, but retailers will find it difficult to avoid passing some of the rising costs on to consumers.”

Happy Christmas, everyone.