Rachel Reeves issued stark warning as high street suffers worst run since financial crash

Rachel Reeves has been issued a stark warning after figures showed UK high streets suffering their worst run since the financial crash. A report from the influential Confederation of British Industry (CBI) showed retail sales dropping for the twelfth month in a row - the longest period of decline since 2009.

Martin Sartorius, Principal Economist at the CBI, said the drop underlined the tough conditions the retail sector faces. He added: "As we approach the Autumn Budget, retailers and other distribution firms will want the Chancellor to deliver certainty and restore confidence to businesses and consumers alike."

Mr Sartorius said employer National Insurance Contributions and National Living Wage increases announced at last year's Budget continue to hit the sector hard, with the broader business tax burden now at a 25-year high.

He said the Chancellor must prevent burdening business further by making sure the Government's Employment Rights Bill avoids unintended consequences which would negatively impact investment and growth.

Retailers expect annual sales volumes to decline at a slightly faster rate in October, according to the CBI. All eyes will now be on the Golden Quarter as retailers hope to benefit from a surge in Christmas shopping.

The CBI is the latest business behemoth to sound the alarm over the state of the high street. Sofa retailer DFS Furniture this week announced a return to profit despite a "weak market environment" and soaring wage costs.

The group said it will keep a tight rein on costs over the year ahead in the face of a "significant" hike in business rates in April next year and an expected further increase to the national minimum wage.

It emerged on Monday that Bodycare will disappear from Britain's high streets after administrators announced the closure of its remaining 56 shops, resulting in around 450 redundancies.

Pets At Home this month announced it was cutting its annual profit outlook for the second time this year. Next's Chief Executive, Tory peer Lord Simon Wolfson, warned the medium to long-term outlook for the UK economy doesn't look favourable when the group announced surging half-year sales and profits.

He said: "To be clear, we do not believe the UK economy is approaching a cliff edge. At best we expect anaemic growth."

Morrisons said customers were "feeling the squeeze" in the face of rising food prices as it revealed a slowdown in sales over the latest quarter.

Boss, Rami Baitieh, said inflation "increased further" over the past two months amid a "challenging" environment for the business.

His comment came after figures from the Office for National Statistics showed the rate of food and drink inflation rose to 5.1% in August, from 4.9% in July.

Giles Hurley, Aldi's UK and Ireland Chief Executive, has warned inflationary pressures affecting shoppers were "persistent and urgent".

He said the retail industry has been clear it wants policies adopted which don't add costs to business as these could filter through to the food sector.

Shirine Khoury-Haq, Chief Executive of the Co-operative Group, said consumer sentiment has dampened, adding: "Competition is high and shoppers are sensitive to price. The cost-of-living crisis is still upon us."

HM Treasury has been approached for comment.