Sales on the high street failed to pick up in the first two weeks of December, as consumers held out against spending money despite a plethora of cut-price deals and the government reduction in VAT.

Almost 70 per cent of retailers surveyed by the Confederation of British Industry (CBI) said that sales fell in the crucial first fortnight of December. That is the worst performance recorded in the Distributive Trades survey since it began in 1983, and is significantly worse than predicted by analysts. Only 13 per cent of retailers said that their sales rose. The balance fell to -55 from -46 in November.

This indicates that an unprecedented number of pre-Christmas sales, at high street names such as Debenhams, Marks & Spencer and House of Fraser, has not been enough to tempt British shoppers into spending with a recession just around the corner.

Andy Clarke, the chairman of the CBI's Distributive Trades panel, said: “The next week will be nail-bitingly tense for retailers as they pin their hopes on a last-minute Christmas dash. Retailers are bracing themselves for a particularly challenging festive season with little prospect of good cheer in 2009.”

The survey also showed that retailers expect more bad news next month. The balance of expectations for January stood at -49, the lowest in the survey's history, despite a sharp reduction in interest rates and government measures to boost the economy.

Official figures on high street spending in November are due today from the Office for National Statistics. However, the ONS figures have sometimes conflicted with data from the CBI survey and the British Retail Consortium.

Vicky Redwood, UK economist for Capital Economics, said: “The UK's CBI distributive trades survey suggests that the huge price cuts seen on the high street have failed to tempt cash-strapped shoppers to part with their cash.”

Howard Archer, chief economist for IHS Global Insight, said: “This indicates that consumers have, so far at least, not been tempted into a late Christmas shopping spurt by the VAT reduction, sharp cutting of interest rates by the Bank of England and the major discounting and sales promotions being seen on the high street.

“Retailers will be desperately hoping that many Christmas shoppers are leaving buying their presents to the very last minute in the hope that they will get even better bargains.”

Interest rates have fallen by three percentage points since October, bringing them down to 2 per cent, their lowest level since the early 1950s, while VAT was cut from 17.5 per cent to 15 per cent in the Pre-Budget Report at the start of December.

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