Bankruptcies, job losses and falling sales are set to affect the UK retail sector for the next ten years amid dwindling levels of disposable income, according to a new report.

The new research, compiled by Verdict Consulting for risk management business ActiveResilience, suggests that a number of issues will threaten the health and vitality of the sector, and warns that retailers will need to be proactive to survive.

Identifying ten possible risk factors, the report draws attention to likely cost increases as a result of rising oil prices, increased environmental legislation, a more expensive supply chain and a reshaping of economic fundamentals.

The result, says the research, will be a "protracted inflationary backdrop" and falling consumer demand as people's levels of disposable income shrink.

As a result, retail spending growth is predicted to diminish from an average annual growth rate of 6% in the 1990s to 2.6% in the 2010s.

"Managing a single risk can be difficult enough, but when risks interact in a complex manner, they can generate new, compounded risks that threaten the very survival of retail organisations," said Ian Kendrick, principal consultant of ActiveResilience.

"Predicting how such interactions will occur and what the outcomes will be is not easy, but those organisations that face up to this challenge will have a distinct competitive advantage as the world of retail evolves in an ever more complex environment.

"The time to start is now."