Retail job cuts surged to their worst level for more than a decade in August as M&S joined a slew of crisis-hit high street companies laying off thousands of workers.
Retailers are braced for even sharper declines in employment in coming months as the taxpayer-backed furlough scheme comes to an end, according to a regular survey by the Confederation of British Industry (CBI).
Its quarterly employment gauge, which measures the difference between retailers laying off and hiring workers, slumped to an 11-year low of minus 45pc in August. This is down from minus 20pc in May.
The recovery in retail sales also unexpectedly faltered after rising into positive territory the previous month. Sales fell back from a 15-month high of plus 4pc in July to minus 6pc this month, although grocers, furniture stores and online retailers bucked the trend by posting growth.
CBI economist Alpesh Paleja warned that dire employment readings will reinforce fears that many job losses have been delayed rather than avoided as employment support is withdrawn.
He said: “Further support may well be needed for the retail sector if demand continues to disappoint."
A host of high street stalwarts have announced job losses since Covid struck, with growing numbers taking action as employers are forced to contribute to the cost for furloughed workers.
Last week M&S announced it will cut 7,000 roles with Boots, John Lewis and Topshop owner Arcadia among those also shedding workers this summer.
The furlough scheme will end after October but business leaders have warned that more support will be needed for the hardest hit sectors.
However, Paul Donovan, UBS economist, warned there is a risk of the Government trying to “preserve a dying part of the economy through misguided nostalgia”.
He said: “The UK was already quite far advanced in the move to online retail, and the pandemic has accelerated this."
Mr Donovan argued that high street retail will survive, but in a very different form.
The CBI’s gloomy survey is in contrast with other more optimistic gauges of the sector over the past few weeks. Last week official data indicated that sales surged above pre-pandemic levels in July as shoppers unleashed pent-up demand.
It is feared that the outlook for retailers could darken in the coming months if a sharp rise in unemployment sends demand falling again or a second wave of coronavirus strikes.