UK retailers are calling on the European Commission not to penalise Sri Lankan workers or British shoppers in a human rights row.

The British Retail Consortium has warned a threat to remove special tax-free arrangements for cheap, good-quality clothes imported from Sri Lanka could hit flourishing businesses and jobs in the country and put up customer prices.

Sri Lanka has until Thursday to deliver to Brussels its response to charges of human rights abuses during the country’s civil war earlier this year.

If human rights complaints are upheld by a Commission investigation, Sri Lanka could lose its special trade access to EU markets.

Alastair Gray of the British Retail Consortium said: “We do not want to get involved in the political issues, but we are saying that whatever the human rights concerns, any response has to be balanced.

“Otherwise, if the preferential access deal is withdrawn by the Commission, business in Sri Lanka could close.

“Sri Lanka has many very good textile factories, but profit margins are small, and if they lose their current import arrangements, there are textiles manufacturers in Bangladesh, Vietnam, and Thailand who will be ready to compete hard.”

An estimated 250,000 workers employed in textile factories could lose their jobs with manufacturers forced to move or increase wholesale rates, leading to price increase of possibly 10% on popular Sri Lankan-made clothes in UK shops including Next and Marks & Spencer.

A European Commission spokesman said: “Questions remain over the degree of effective implementation of certain UN human rights conventions in the country.”