57% of retailers plan to cut expenditure after forecasting trading will worsen over the next three months, according to the latest survey by the CBI.
62% of respondents to the CBI's Distributive Trades Survey said that sales in the first half of November were lower than the same period last year. 16% said that sales were higher than the previous year. The resulting -46% balance is lower than the -27% balance in October.
The survey found that retailers were expecting sales volumes to fall by 40% in December against the previous year.
A balance of 37% said the retail business situation would deteriorate further over the next three months, leading to 57% to cut expenditure - the highest proportion since the CBI survey began in 1983.
Andy Clarke, chairman of the CBI Distributive Trade Panel and retail director of Asda 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."