Shoppers converged on high streets and malls across the country this morning for the busiest Boxing Day sales in living memory, as retailers slashed prices in a desperate bid to stay afloat.

Many stores were offering discounts as high as 90 per cent to lure customers inside after a dismal pre-Christmas period.

Department stores reported large queues from as early as 5am, two hours before the first shops opened, although millions of bargain-hunters got started early, breaking off from turkey and charades for a spot of online shopping on Christmas Day itself.

London’s Oxford Street district was expecting footfall of about half a million people today. But despite the last minute surge, analysts warned that profits were down and the outlook was gloomy for shopkeepers after the collapse of three high street brands in just 24 hours earlier this week.

The British Retail Consortium said that margins were under severe pressure in the wake of unprecedented discounts and promotions combined with weak sales.

Stephen Robertson, the BRC Director General, said: “We’ll see the full December figures in a few weeks, but they won’t be pretty. Despite a last minute surge, it’s becoming clear that overall this has been a poor Christmas for retailers, as struggling customers cut back and traded down.

Pressure was increased on retailers by the need to pay the rent, with the quarterly rent day falling on Christmas Day.

In the fight to raise cash, many stores began their sales earlier than in previous years. Some retailers, including John Lewis and Marks & Spencer, began their sales online yesterday.

M&S, John Lewis and Fenwick will begin their sales tomorrow and have promised "significant reductions".

Debenhams has cut up to 70 per cent off prices across its stores, in what it describes as its biggest-ever sale. Tesco has also announced it is launching its largest sale.

The New West End Company (NWEC), which is responsible for Oxford Street, Bond Street and Regent Street, said that more stores than ever were open on Boxing Day.

Jace Tyrrell, from NWEC, said: “Every store on Oxford Street is open today apart from John Lewis and Marks and Spencer, which is unheard of.”

The sales rush came as a leading think-tank forecast that Britain’s economy could be set back by five years as the current downturn deepens.

In one of the gloomiest predictions yet for the UK’s finances, the Centre for Economics and Business Research (CEBR) predicts that the economy could shrink by more than 2.5 per cent next year as bank lending continues to stagnate and business investment is slashed.

That would represent the biggest slump since 1946 when the UK was wrestling with both a freezing winter and the effects of mass demobilisation after the Second World War.

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