An early symptom of the credit crunch appeared in January, when it seemed that a new £40m shopping centre in Witney would - at best - be delayed. Meanwhile, Oxford's £300m Westgate redevelopment scheme was going ahead on schedule.

Now the tables are turned. The Oxford scheme is on the back burner, courtesy of the credit squeeze; but Witney is steaming ahead, despite the deepening economic gloom. Since January we have had rising inflation, a fuel price rise threatening to change shopping habits, a falling pound, harder credit and - perhaps ominously for a development with a large residential ingredient - stagnation in the housing market.

Luke Pickering, director of Lincoln company Simons, the developer of the Witney centre, told The Oxford Times: "I believe this is one of only three major projects to get under way in the UK this year, the other two being at Bury in Lancashire, and our own project in Carmarthen."

He explained that the finance was in place, thanks to the backing of Kandahar, the UK investment arm of David Ross's Carphone Warehouse empire, which picked up the entire bill for the development when investment bank Morgan Stanley pulled out.

Marriotts Close, built largely on the former car park opposite the old ambulance station in Welch Way, will have 18 shops, 140 flats, a cinema, a children's playground, and a 650-space multi-storey car park.

Nine big names have already signed up as commercial tenants - M&S, Starbucks, Frankie & Bennys, Café Rouge, Desire by Debenhams, Wallis, Monsoon/Accessorize, New Look, and Dorothy Perkins. The 17,500sq ft cinema is also let to Cineworld.

Scott Harkness, of agents Carter Jonas, said: "In terms of space already let out, only smaller units remain. We have already let 91,000 sq ft of an overall retail of about 104,000sq ft."

So why are developers, financiers, retailers, and even hard-pressed housebuilders keeping their nerve in Witney, when all around are losing theirs - including those just down the A40 in Oxford?

Head of community services at West Oxfordshire District Council Bill Oddy said: "Free parking here is obviously a major plus. Our research shows that even people living in Oxford are coming to Witney to do their shopping rather than pay to park in their own city centre.

"But all the same, until recently, about 80 per cent of Witney residents' income was spent outside the town. Now we hope Marriotts Close will help put a stop to that.

"Witney is a very attractive market town, a centre for people living in the prosperous villages around. The High Street retains its old character with developments such as the Woolgate and Mill Walk fittting in well.

"We believe that independent traders, particularly those at the north end of the High Street, will also benefit from the increased activity that Marriotts Close will bring.

"But, of course, we want to work with them."

On this last point, some smaller businesses in the town are wary of the new development. Ten have formed their own network, the Witney Independent Retailers Association, with the specific aim of monitoring the effect of the influx of multinational giants to Witney.

Instigator of the group Jeanne Chattoe, who has run Renaissance Fashion in Wesley Walk for the past five years, said: "This will affect a whole spectrum of shops, some of whom are already struggling due to the retail slump, summer flooding, and high business rents and rates."

But Mr Pickering said: "We will undoubtedly increase the footfall. It will then be up to them to have a good enough business to attract the custom. You can take a horse to water, but you cannot make it drink.

"A good mix of local and national shops is what we want, so that customers will less far to travel when they do their shopping."

But how will the slowdown in the housing market affect the development? Could Marriotts Close open in September 2009 with unsold flats over and around the shops?

Mr Pickering said: "Linden Homes have already paid for the housing element, so sales of the flats will not affect the schedule of the development."

Like all housebuilders, Linden Homes, part of the Galliford Try Group, is feeling the economic pinch. This week it closed its Thames Valley office in Marlow, where 60 people worked.

A spokesman for Linden Homes, Natalie Watson, told The Oxford Times that none of the 138 one- and two-bedroom flats had sold yet, because the development had not been formally launched.

She added: "Linden have had a huge amount of interest and they are confident that the development will be a great success."