This article is more than 1 year old

This article is more than 1 year old

High street sales have slumped at their fastest pace since 2008 in August, leaving retailers’ confidence “crumbling”.

The CBI’s health check on the retail industry found sales volumes and orders fell at the fastest rate in 10 years, while the wholesale industry experienced a drop in orders on a scale not seen since 2013.

Employment in the retail sector fell for the 11th successive quarter and investment intentions for the year ahead were negative for the sixth consecutive quarter, indicating that shop owners were “buckling” under rising costs and the uncertainty created by the threat of a no-deal Brexit.

Retailers expected the sharpest deterioration in business conditions since February 2009 over the next three months, according to the CBI’s quarterly distributive trades survey.

Anna Leach, the business lobby group’s deputy chief economist, said 10% of respondents reported that sales volumes were up on a year ago, compared with 58% who said they were down, giving a balance of -49%.

“Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead,” she said.

“It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action in the budget in the coming months to alleviate some of these pressures.”

Last week more than 50 retailers, including Marks & Spencer, Harrods and Iceland, wrote to the chancellor, Sajid Javid, demanding tax cuts to safeguard the future of the high street amid intense pressure from online rivals.

In the letter, the retail bosses called forurgent reform of the business rates system, which taxes companies based on the buildings they occupy.

The heads of Sainsbury’s, Asda and Morrisons, as well as Boots, Greggs and John Lewis, said rates were outdated and harmed investment, to the detriment of jobs and communities.

The CBI data contrasts with official figures for the retail industry, which show a more buoyant sales trend. Last week the Office for National Statistics’ survey, which covers the online industry more comprehensively, found that web sales increased in July, while department stores, long considered a dying breed on the high street, notched up their first increase this year.

The figures, which wrong-footed City economists who had expected a 0.2% decline, showed the quantity of goods bought rose 0.2% last month, buoyed by the annual Amazon Prime Day.

The CBI said internet-based, non-store retailers posted a rise in sales, but volumes dropped across most other sectors, including in grocers, clothing and hardware and DIY.

Supporting the CBI’s outlook, the latest IMRG Capgemini e-retail sales index, which tracks more than 200 online retailers, showed sales slumped to the lowest-ever July growth. This came despite warm weather and customer-focused events such as Amazon Prime Day.