The UK’s biggest supermarket chain is treading water with sales growth down to 2% on the back of cheaper brands targeted at cash conscious shoppers.

Tesco has snatched 300,000 extra customers by going down market in a drive to keep sales by competing with Netto, Lidl and Aldi.

The 2% sales increase is only half that of the previous quarter and the company’s lowest growth rate for 15 years.

To stimulate spending and consumer confidence, the Bank of England is rumoured to be ready to cut interest rates by as much as another 1% on Thursday.

This is against a backdrop of more jobs axed or threatened in the lead up to Christmas.

Swiss bank Credit Suisse has cut 650 jobs – about 10% of the bank’s UK workforce - and HSBC has sacked another 500 people. Although many people have sympathy with those losing jobs this close to Christmas, it only seems fair that the banks that stirred up the current financial mess are suffering as well.

Car accessory retailer Halfords plans to shed 250 jobs. About 200 posts would be cut across the firm’s 450 stores, along with 50 more at the head office in Redditch, Worcestershire.

Land of Leather looks like the next retail casualty as the firm revealed a number of possible buyers had approached the struggling firm.

Sales are 47% down on the year and the share price has tumbled from £1 to just 9p since January. This gives the firm a market capitalisation of £3.2m – less than its cash reserves of £6.9m.

The company is debt-free but Barclays Bank holds £4.5m of the capital, as insurance against having to repay credit card payments if the company goes bust.

On the markets, the FTSE closed 38% down at 4065 and the DOW 4.43% down at 8149, a fall of 670 points.

The Pound weakened against the US dollar to $1.48 and closed at £1.18 to the Euro.