Shops felt the recessionary pinch in December, with Office for National Statistics figures showing sales fell by 0.8 per cent in December.

This was a slighly smaller drop than the 1.4 per cent recorded by the British Retail Consortium a few days ago.

Non-food retailers suffered the most as food stores and online proved more resilient to the downturn. Weak sales towards the end of last year tipped many well-known names into administration.

Stephen Robertson, BRC director general, said: "The official figures are now painting a more realistic picture of how tough conditions are for customers and retailers.

"A poor Christmas for retailing overall hides the contrast between sectors. A triple whammy of dramatically declining sales, margin-crushing discounts and rising costs hit non-food retailers hardest overwhelming some businesses and destroying retail jobs. Food sales were more resilient – we all have to eat.

"Our own results show most people believe we have been in recession for months and have been behaving as if we were for some time. With customers already budgeting defensively as job fears mount, confirmation of recession can’t weaken confidence much more."

John Cridland, deputy director-general of the CBI, the employers organisation with members across the county, said: "These numbers are much worse than expected and this is the sharpest contraction in the economy since 1980.

"The intensity and speed of falling demand combined with the global credit crunch mean this recession is going to be more painful than the early nineties, and sadly one consequence of this will be much higher unemployment.

"Looking ahead, we hope the impact of interest rate cuts, falling inflation, the fiscal stimulus and the Government’s recent measures to kick-start lending will have a stabilising effect later this year."