High street stores have been told to brace for an “exceptionally tough festive period” amid concerns that higher taxes could force more retailers to abandon towns and city centres. 

New figures from advisory firm BDO reveal that sales in stores last month were up just 1.7pc year-on-year, reflecting how retailers were already struggling before the Chancellor launched a £25bn raid on employers in last week’s Budget.

Including online purchases, overall retail sales in October were up 4.1pc on last year, with areas such as fashion and homeware among the worst performing. 

BDO head of retail and wholesale Sophie Michael said these figures marked a poor start to the festive season, as sales volumes are still “not back to 2022 levels. 

She said: “With this being the most important time of the year for the sector, if sales figures continue to follow this trajectory the industry is set for an exceptionally tough festive period.”

It comes amid wider fears for the sector after the Chancellor’s tax raid, which some analysts predict could cost retailers an extra £2.5bn a year. 

In her first Budget, Ms Reeves laid out plans to increase employers’ National Insurance by 1.2 percentage points to 15pc from April, as well as lowering the level at which they have to start paying it. 

When combined with the 6.7pc rise in minimum wage next April, it is expected to push up employment costs for some retailers by up to 10pc.

The BDO said these extra costs would act as a barrier to further investment on the high street, forcing retailers to halt their investment plans. 

Read the latest updates below.