Debenhams, the No. 2 department store group, has ratcheted up the pressure on rivals, launching its annual five day pre-Christmas promotion with what it claims are its deepest ever discounts.

The firm said on Tuesday it will cut the prices of tens of thousands of items in its 164 UK stores and online by up to 40 percent, equating to 200 million pounds of savings.

The Christmas spectacular event, part of Debenhams' promotional calendar every year, will run from Wednesday to Sunday with extended store opening hours.

The move ... heralds the start of what pundits are predicting will be one of most frenzied Christmases in retail in the last 10 years, said Debenhams.

It comes against a backdrop of job insecurity and rising taxes and will no doubt force the rest of the high street to follow suit.

Last week Britain's biggest clothing retailer Marks & Spencer said promotional activity in clothing, footwear and homewares markets was up 5 percentage points year on year in its first half to October.

M&S Chief Executive Marc Bolland said he expected this sort of promotional pressure to continue in the second half.

While retailers are hopeful of stronger demand this Christmas than last, when sales were hit by heavy December snow, analysts say recent weak trading, partly due to unseasonally warm weather, has left stores with high stocks that could lead to a frenzy of discounting.

Cash-strapped British consumers are feeling the pinch as disposable incomes are squeezed by rising prices, muted wage growth and government austerity measures, and as they worry about a stagnant housing market, job security and a fragile economic recovery.

Industry group the British Retail Consortium said last week a fall in October sales from stores open more than a year augured badly for the key Christmas trading period, while on Sunday John Lewis, Britain's biggest department store group, said sales dipped in the week to November 12.

Shares in Debenhams, which last month posted a 10 percent rise in annual profit, were down 1 percent at 64.2 pence at 9:52 a.m. Shares in M&S were up 0.1 percent at 331.1 pence.

(Reporting by James Davey, editing by Mark Potter)