People walk on London’s Oxford Street ahead of Black Friday next week, in London, Britain, November 23, 2025. REUTERS/Jaimi Joy

LONDON (Reuters) -British retailers have reported the sharpest drop in confidence in 17 years and their sales fell again ahead of Wednesday's budget which is likely to include tax increases, according to a survey published on Tuesday.

The Confederation of British Industry said its gauge of how retail sales compared with a year earlier worsened to -32 from -27 in October. The CBI's gauge of expected sales for the month ahead improved to -24 from -39.

But a quarterly measure of firms' business sentiment for the next three months tumbled to -35 from -10 in August, marking the weakest reading since late 2008 when global financial crisis peaked.

"Retailers continue to grapple with a long spell of weak demand, as households remain cautious around day-to-day spending," Alpesh Paleja, the CBI's deputy chief economist, said.

"With all eyes on the forthcoming budget, uncertainty in the run-up has meant that businesses are holding back on plans for investment and hiring," Paleja said.

A measure of inflation in prices charged by retailers fell closer to its long-run average, slowing sharply from August.

The CBI's survey was conducted between October 28 and November 13. Of the 177 respondents, 66 were retailers and 95 were wholesalers.

(Writing by William Schomberg)