The battle to cut costs is seeing workers laid off in record numbers at stores across the country, the Confederation of British Industry has warned.

A balance of 49% of retailers reported having shed staff in the last quarter – the highest since CBI records began in 1983 – and many more redundancies are expected over the coming months.

But despite the heavy job cuts the situation was not as disastrous as some analysts had predicted, the CBI claimed, and there was optimism the situation would improve later in the year.

“February was another tough month and sadly many retailers are cutting jobs as shoppers stay away and the recession deepens,” said Asda COO Andy Clarke, chairman of the CBI Distributive Trades Panel. “But conditions were not quite as harsh as they were last month and in the run up to Christmas.

“March looks similarly testing but we hope that, as the year goes on, lower interest rates and falling inflation will encourage a pick up in spending.”

Supermarkets were the strongest reporting retail sector, with a balance of 60% claiming higher sales than a year ago. By contrast the DIY and household goods sector suffered heavy sales drops.

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