Britain’s biggest retailers will ring the opening bell on a brutal pre-Christmas price war today as they prepare to slug it out for the shrinking consumer purse.

Marks & Spencer is holding a 20 per cent off sale, with some stores staying open until midnight tonight. Sir Philip Green’s Arcadia Group hit back with a 20 per cent-off campaign and Debenhams will go on the offensive with a three-day “spectacular” sell-off.

Analysts said that the price cuts could lead to a vicious circle of margins eroding and sales declining as shoppers delay their Christmas purchases in the hope of last-minute discounts.

The moves, viewed by the market as panic measures, came on another bleak day for the British economy in which banking heavyweights sparked another 200-point slide in the FTSE 100 and it emerged that the Bank of England had considered cutting rates by more than two percentage points but backed off because it feared the impact of such a cut on the pound.

The anxiety among retailers was highlighted when the shares of DSG International, the owner of Currys and PC World, plunged 31 per cent to a record low of 11p after one of its joint house brokers said that it might not survive the recession intact.

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