Hopes that consumer spending was about to pick up have been dashed by the CBI’s quarterly survey, which shows little sign of any recovery for retailers threatened by the housing slowdown and the new quotas on imports of Chinese clothing.

One in five retailers says that their overall business outlook will deteriorate over the next quarter, the first time in seven years that more retailers have been despondent about the future than hopeful. Only about 10 per cent of retailers were optimistic, with the majority neutral.

The new figures, published as part of the CBI’s quarterly Distributive Trades Survey, will make grim reading for retailers, who have been forced to slash prices this summer to entice shoppers back into their stores.

The recent figures showed that the volume of sales in August, compared with a year ago, was down for almost half of retailers (45 per cent), while only a quarter (27 per cent) reported an increase in sales.

The underlying sales trend, which is measured by a three-month moving average to cancel out short-term blips, is the weakest in the 22-year history of the CBI’s survey.

“Conditions in August continued to be very tough for retailers and many fear the outlook is going to get worse before it improves, despite the recent interest rate,” John Longworth, executive director of Asda and chairman of the CBI’s Distributive Trades Survey panel, said.

The grim figures were reflected in trading at Britain’s biggest shopping centres over the holiday weekend. While firm shopper numbers were unavailable, anecdotal evidence suggested that the traditional back-to-school shopping spree had been affected by good weather and television coverage of the Test match cricket between England and Australia. Ashes fever, which saw the final day of the Test draw 7.7 million viewers, has taken retailers by surprise.

Natasha Burton, marketing manager at FootFall, a company that counts shoppers for retailers, said: “We are expecting shopper numbers over the Bank Holiday to be flat, at best. Travel figures suggest about 15 million people will make their way to the coast and about 1.7 million people have gone overseas.”

A spokesman for the Brent Cross shopping centre in London said: “People coming back from their holidays have been shopping before going back to work or school. But that’s been tempered by the good weather and the sport on TV.”

The fact that many retailers started sales early in the summer also means that there is nothing to entice bargain-hunters to the shops. Two fifths of retailers have reported prices lower in August than they were a year ago.

The housing market slowdown continued to have a negative effect on many retailers, with sales of DIY and hardware items such as furniture, flooring and carpeting hit hard.

Traditionally the motor trade enjoys an upturn at this time of year, with new registration plates appearing on dealers’ forecourts, yet more than half of motor dealers fear that sales will be down in September, compared with a year ago.

The CBI’s survey covers 20,000 outlets of companies responsible for 40 per cent of employment in retailing.

Separately, a KPMG survey of UK manufacturers shows that optimism has sunk to its lowest since data collection began in 2002.