Worst December ever for retailers

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Like-for-like sales slumped 3.3% last month compared with December 2007, according to the British Retail Consortium (BRC) KPMG Retail Sales Monitor.

The performance is the poorest for December since the survey began 14 years ago and the BRC said, barring Easter distortions, it was also the worst of any month in the poll's history.

The BRC described the sales figures as "truly dreadful" and said retailers had been hit by shoppers leaving their Christmas shopping until the last minute and waiting for early discounting.

Food and drink was one of the few sectors to see an increase in sales during the five week period from November 30 to January 3.

But even food retailers saw the weakest sales growth since March and the BRC said sales were also inflated by higher prices.

The gloomy outlook was echoed by the British Chambers of Commerce (BCC) in its fourth quarter economic survey, which said both the manufacturing and service sectors recorded their worst figures since records began in 1989.

The BCC said it had been taken by surprise by the severity of the downturn and would be almost certain to revise downwards the predictions it made for the UK economy just two weeks ago.

Chief economist David Kern said his January forecast of a contraction in the UK economy of 2.2% in 2009 was now likely to be revised further downwards, to around 2.3% or 2.4% negative growth in Gross Domestic Product (GDP).

He predicted the Bank of England's Monetary Policy Committee (MPC) would pull interest rates "as near as practicable to zero", bottoming out at around 0.75% or 0.5%.