London Briefing:By the end of the week, the tinsel and trees will have been consigned to the trash - and by the end of the month, we'll know which retailers will be joining them there.

Throughout January, in a flurry of trading statements Britain's publicly-quoted retailers will reveal to investors just how they fared over the crucial festive season.

Dire warnings in December of the worst Christmas in a quarter of a century now look to have been unduly pessimistic, although the full picture will not become clear for a few weeks yet.

Warnings that Christmas is getting later each year have now become something of a tradition in the retail sector. And each year the consumer and retailer play their own version of the "let's see who blinks first" game: if the retailer loses, they end up cutting their prices before the big day.

There was plenty of evidence of discounting in the run-up to Christmas this year. But, as usual, the confident retailers held their nerve - and prices - until the post-Christmas sales.

Thus while the fashion chain Next is widely expected to deliver disappointing sales news tomorrow, its profits are likely to have held up better than many of its competitors.

Next steadfastly refuses to join in the pre-Christmas discounting seen elsewhere in the sector. While this may have hit its sales figures in December, it will have provided crucial protection to margins.

Staying at full-price in the run-up to Christmas also ensured that its January sale remains one of the most popular in the high street, with shoppers traditionally queuing outside Next stores from the early hours on the first day of the sale.

Next will be the first of the major retailers to reveal how it has fared over the festive season, although the sector has already seen some casualties.

It is unusual for retailers to warn on profits in the countdown to Christmas but both Woolworth and HMV sounded the alarm on profits in December, both warning that entertainment sales had been particularly poor.

The first publicly-quoted retailer to report post-Christmas was Liberty, the luxury London store, which last week revealed a 6 per cent jump in festive sales.

Its takings were boosted by what the group describes as "ultra high net-worth individuals" for whom money is no object. These wealthy shoppers appear to have spent freely, not only at Christmas but also in the January sales. The trick, said Liberty, is to offer the big spenders something different, and they will always buy.

Other retailers are not so fortunate, however. As well as fierce competition from their high street rivals, they have faced a huge onslaught from online competitors.

With the delivery problems that marred previous Christmases now largely resolved, consumers have turned to the internet in record numbers.

Early estimates suggest shopping on the net surged by as much as 50 per cent in December, ahead of all forecasts.

By the end of January, we will have a clearer picture of just how the high street has fared. But even those retailers who did well over Christmas will not need reminding that, with another increase in interest rates on the cards within the next few months, 2007 will be another tough year.

VODAFONE'S BIG TEST

The deal frenzy that pushed merger and acquisition activity up to record levels in 2006 is continuing into 2007, with mobile phones group Vodafone leading the charge.

Bucking the trend of overseas bidders buying up British companies, Vodafone is putting the finishing touches to what is expected to be a $13 billion bid for a controlling stake in Hutchison Essar, India's fourth-largest mobile phones operator.

The British company is locked in a bidding war with two Indian companies - Reliance Communications, India's second-largest mobile company and Essar, already joint venture partner in the business and with first right of refusal on the 67 per cent stake put up for auction by majority-owner Hutchison Whampoa.

A move into the emerging market of India makes compelling strategic sense for Vodafone, but this bid battle will prove a crucial test for its chief executive Arun Sarin, who last year narrowly headed off calls for his resignation.

Failure to secure this deal, or clinching it by overpaying, could prove the final straw with disgruntled City investors.

Sarin has won some early support from one vocal institutional shareholder - Standard Life, which has been one of Vodafone's fiercest critics, has publicly said it supports the Indian expansion.

The institution, which has a 1.7 per cent stake in Vodafone, cited the group's successful purchase of Telsim Mobil in Turkey.

It was widely thought to have overpaid at the time, but the business is now trading ahead of expectations.

As followers of Vodafone know only too well after the excesses of the technology takeover frenzy a few years ago, winning bids is easy if you throw enough money at a target.

The real test for Sarin will be to balance his ambition to gain an important foothold in the huge Indian market with the reality of what he - and his shareholders - can afford to pay.

Fiona Walsh writes for the Guardian newspaper in London