Retailers are expecting a lacklustre Christmas after reporting a decline in high street sales in November, according to the CBI's Distributive Trades Survey.
16 per cent of retailers said sales were higher in the first half of November compared with a year ago, while 62 per cent said they were lower - a negative balance of 46 per cent.
The figure marks a deterioration on October's balance of -27 per cent and was worse than expected by retailers.
A balance of -40 per cent expect a fall in year-on-year sales volumes during the crucial month of December and retailers' confidence in the sector remains weak.
A balance of 37 per cent expect the sector to deteriorate over the next three months. A net 57 per cent plan to cut expenditure, the weakest figure since the survey began in 1983. A net 16 per cent of retailers reported that they had slashed head count.
While sectors linked to the housing market continued to suffer there was a decline in sales volumes at the grocers, ending two years of growth. The only sector to report sales growth was footwear and leather.
CBI Distributive Trades Panel chairman and Asda retail director Andy Clarke said: "Christmas is going to be extremely tough this year, with retailers having to work harder than ever to keep the tills ringing.
"The added pressure of changing millions of prices to reflect the cut in VAT will be an unwelcome and costly burden."
