Philip Hammond says he is strongly considering introducing a so-called "Amazon tax" to try to rescue struggling retailers.

In his strongest intervention on the issue, the chancellor told Sky News he was thinking of introducing a special retail tax on online businesses - if necessary without full international co-operation.

Mr Hammond also warned that the high street would have to change for good.

"We're changing our shopping habits," he said.

Image: The chancellor was speaking as the latest set of GDP figures were released

"More and more of us are buying online. Indeed, Britain has the biggest percentage of online shopping of any major developed economy. That means the high street will change.


"We're very clear that you have to support the high street through that process of change.

"The nature of the offer on the high street is going to change over time. There's going to be less retail, more leisure, bars, community facilities."

While the chancellor has steered clear of any plans to reform business rates, as his political opponents are suggesting, he indicated that the country needs a new set of taxes to tackle online businesses, which tend to pay far less than their high street competitors.

"We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online," he said.

"That requires us to renegotiate international tax treaties because many of the big online businesses are international companies.

"If we can't get international agreement to do this we may have to look at temporary tax measures to rebalance the playing field until we can get international agreements."

How UK retail can adapt in 2018

Pressed on which kinds of measures, the chancellor said: "The EU has been talking about a tax on online platform businesses based on value generated.

"That's certainly something we'd be prepared to consider."

The comments came as department store House of Fraser was placed in administration, before being bought by sports retailer Mike Ashley.

A number of high street names have had to shut down in recent months after being faced with high costs and low sales numbers, prompting campaigners to warn of the death of the high street.

The chancellor also told Sky News that while he was encouraged by the 0.4% GDP growth figures on Friday, the economy remained weaker than it would have been had the UK not voted for Brexit.

"Clearly that uncertainty is having a depressing effect on the economy," he said, adding that the Chequers deal for a future relationship was the "best way forward".

"It's a fair and sensible pragmatic offer to the Europeans.

"It will allow us to deliver on the result of the referendum, taking back control of our immigration, allowing us to develop our own trade policy and ending the sending of money to Brussels every year."

He added: "Under the Chequers deal we expect that the economy will grow at broadly the rate as it did inside the EU.

"Doing a deal like Chequers will probably allow the economy to grow at broadly the same rate as inside.

"You will not have quite the same amount of access to the EU but we will have the freedom to develop relations with countries outside the EU."