In a meeting with senior officials at the Treasury on Friday, the British Retail Consortium (BRC) warned that the Chancellor's upcoming Budget must avoid taxing the one stable engine of economic expansion to the point where it can no longer deliver growth in jobs, innovation and investment.

The treasury was told that with the current trend of slowing retail sales and static prices, the sector could not withstand the constant onslaught of increasing taxation and government-based rises in the cost of doing business without serious consequences for retailers and the UK economy as a whole.

Bill Moyes, director general of the BRC, said: 'The Treasury must stop treating the retail sector as a piggy bank to be shaken just because the Chancellor got his sums wrong.

'In the current retail climate the industry cannot go on absorbing increases in taxation and cost. The Chancellor needs to act to stimulate consumer demand, not suffocate the success of the one reliable engine of growth in the UK economy.' The biggest concern expressed to the Treasury was the retail sector's fear that the proposed new regime of Stamp Duty would take £1.4 billion from the sector over the next three years. Proposed reforms would not only push up the existing cost of Stamp Duty by raising the tax take, but also by including new up-front payments, undermine the ability of new retailers to enter the market.