Marks & Spencer (M&S) is upping the ante in the high street battle for shoppers’ dwindling disposable income by launching a one-day only "20 per cent off" sale in which some of its stores will stay open until midnight.

Tomorrow's sale at M&S, which starts online at one minute past midnight, is its biggest pre-Christmas promotion for four years and will include all clothing and home lines in addition to wine and Christmas food gifts.

As many as 24 M&S stores will trade until midnight on Thursday, so shoppers can make the most of the discounts. A spokeswoman for Marks & Spencer said: "We are trading competitively in what is a very volatile market. We want to make sure that we get our share of every £1 spent."

Debenhams is also planning its annual three-day "spectacular" sale starting today, with most products reduced by 20 to 25 per cent.

Analysts said Sir Philip Green’s BHS department store and mainstream parts of his Arcadia fashion group, such as Dorothy Perkins and Burton, are also planning sales activity this week.

High street retailers are battling to lure shoppers into their stores in the face of falling retail sales.

Official figures due out tomorrow are expected to show that retail sales during October fell by 0.8 per cent as UK consumers deal with factors including rising energy bills and increasing unemployment as the British economy heads into a full-blown recession.

Nick Bubb, analyst at Pali International, said the M&S sale was an unplanned promotion in response to disappointing October sales.

“It will hurt margin,” he said: “M&S did say that they reserved the right to promote tactically pre-Christmas and there could be some slippage in margin, so it’s kind of allowed for in margin assumptions.”

Mr Bubb said the last two weeks for M&S had been "terrible”, with a poor economic climate aggravated by mild weather.

Figures from the British Retail Consortium (BRC) survey for October, out last week, showed a sharp deterioration.

Retailers are desperately hoping that the decision by the Bank of England to slash interest rates from 4.5 per cent to 3 per cent at the start of the month will give a significant boost to sales in the vital pre-Christmas shopping period.

However, Howard Archer, chief UK and European economist at IHS Global, predicts that retailers face a very difficult Christmas period.

"Despite the sharp interest rate cut, we strongly suspect that consumer spending will be held back by the squeeze on purchasing power coming from increased utility bills and still relatively high food prices, muted income growth, faster rising unemployment, plunging house prices, sharply lower equity prices, very tight credit conditions and increased debt levels," he said.

Savers, who have been hit by the sharp interest rate cut, will also be less inclined to spend. Furthermore, serious concerns about the economy, job prospects and the financial crisis are highly likely to lead to considerable consumer caution in spending, Mr Archer said.

"We suspect that many retailers will increasingly feel the need to engage in discounting, special promotions and flash sales during the run-up to Christmas to try and get hard pressed consumers to spend," he added.

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