Reeves's tax hikes leave 50,000 firms on the brink as stagflation fears grip Britain
In a bleak update, the CBI said its gauge of how retail sales compared with a year earlier stood at minus 34 this month as customers baulked at rising living costs.
Although that was better than minus 46 seen in June, it was the tenth month of decline in a row, stretching back to October last year, according to the lobby group's figures.
The slump came as firms battered by the Chancellor's £25billion National Insurance tax raid and an increase in the minimum wage pushed up prices – hitting customers in the pocket.
The High Street is also grappling with higher business rates following Labour's failure to reform the hated levy on shops and other business properties.
The CBI report sparked fresh concerns over the state of the economy as corporate restructuring specialist Begbies Traynor warned a record number of companies are in 'critical financial distress'.
Its 'Red Flag Alert' found there are 49,309 firms on the brink – up 21.4 per cent on a year ago.
Begbies said 'consumer-facing industries continued to experience some of the most extreme rises in critical financial distress' and highlighted a 41.7 per cent rise among bars and restaurants and a 17.8 per cent increase in general retail.
A host of household names have been hit, with River Island battling for survival following the collapse of maternity brand Seraphine and fashion chain Quiz.
It is feared Rachel Reeves will hammer households and private business again with another round of tax hikes in the Budget this autumn to pay for Labour's lavish spending on the public sector.
The rising costs faced by business have already pushed up inflation to 3.6 per cent – well above the 2 per cent target – while the economy has also contracted for two months in a row.
That has raised the spectre of stagflation – a period of economic stagnation and inflation that hits living standards and costs jobs.
It has also cast doubt over how far and fast the Bank of England can cut interest rates this year.
The CBI urged ministers to 'seek to build shorter-term confidence' in the Government's economic plans and deliver an autumn Budget 'that acknowledges the burden firms are facing'.
Cautioning over the impact of the new workers' rights Bill, Martin Sartorius, principal economist at the CBI, said: 'Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand.'
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