One in six convenience store retailers are considering closing down because of the impact the illicit tobacco trade is having on their sales.

The number is up on last year when the Tobacco Retailers Alliance’s (TRA) annual survey of almost 1,000 independent retailers found that one in eight store owners were under threat of closure.

This year’s survey also found that four in 10 retailers had considered reducing staff due to lost sales from tobacco smuggling and cross-border shopping, also up from three in 10 in 2012.

The ravages of the illicit tobacco trade are being most keenly felt in London, where 30% of retailers said they were considering closing down their business as a result of the impact of the illicit trade. London’s retailers were also the most likely to be considering reducing staff, with 56% of independent retailers in the capital thinking about the move.

“These results show that tobacco smuggling is not only a threat to the livelihoods of independent retailers, but one that continues to worsen,” independent retailer and TRA national spokeswoman Debbie Corris said.

“The high levels of tax on tobacco mean that a smuggler selling at half the price I charge will make more money selling his tobacco here than almost anywhere else in the EU. The government needs to allow tax levels in the other member countries to catch up with those in the UK so that smugglers do not see the UK as the most profitable place to ply their illegal trade.”

Results of the report coincided with the news that three men had been arrested in Peterborough on suspicion of smuggling an estimated 8.3 million cigarettes into the UK and evading more than £1.5m in excise duty.