Traffic jams have formed outside shopping centres as customers clamour to get hold of an unprecedented array of cut-price goods, with many products selling for less than half price.

Retailers appear to have had little to celebrate in the run up to Christmas

Retailers have been forced to slash prices after poor sales in the run up to Christmas left them with huge amounts of excess stock - even though they had been more careful when ordering than the year before. This has created a shopping stampede, with canny customers holding on to their cash until after Christmas.

The surge in spending could prompt the Bank of England's Monetary Policy Committee to maintain interest rates at 6.25% when it meets on Wednesday and Thursday.

However the sales rush may not be enough to save retailers from their worst Christmas for 20 years and many City economists believe the Bank of England will cut the rate of borrowing again to help stimulate the UK economy.

Mountains of unsold stock

High Street shops have not been as busy as shopping centres and retail experts still fear that shops will be left with a mountain of unsold stock, despite the massive mark-downs.

A string of the UK's leading retailers, including the biggest of them all, Marks & Spencer, have announced disappointing profits in recent months. Marks & Spencer has even been forced to launch an unprecendented television advertising campaign in an attempt to woo back customers.

Cut-price goods will slice through retailers margins, which is bound to hit profits further.

Job fears

Fears that the UK economy is heading for a slowdown and that hundreds of thousands of workers could lose their jobs, prompted shoppers to exercise Christmas caution, with many choosing to rein back on spending.

John Lewis, the department store group, reported a sharp upturn in sales in the last few days before Christmas, but trading in the weeks before was disappointing.

Time will tell

City analysts will get their first real indication of how Christmas trading has gone when Goldsmiths, the jewellery group, makes a trading statement on Tuesday.

However retail watchers will have to wait until the following week to get an accurate picture of the festive trading period when industry heavyweights Next, Dixons, House of Fraser and Sears announce their own trading statements.