Quoted retailers posted more negative updates in the third quarter than at any point in the last two years.

The proportion of stores reporting like-for-like sales growth also fell to its lowest level in four years, a study by business adviser Grant Thornton revealed.

Twenty-two per cent of retailers issued downbeat updates and only 26 per cent were “positive in tone”, the survey found. In the third quarter of 2007 only 15 per cent of updates were negative.

Grant Thornton head of retail services David Bush said: “The economic turmoil in the financial markets, the banks’ continued clampdown on unsecured lending and the recent rise in UK unemployment leave very little likelihood of a short-term end to falling consumer confidence and means that retailers have a real problem about how to improve trading performance.”

Only 38 per cent of retailers reported positive like-for-likes in the third quarter.

Bush said: “This statistic is deeply concerning and highlights the likely resultant downward impact on profits and cash as gross margins continue to remain under pressure due to the significant amount of product price discounting needed to entice customers into stores.”