BOOTLEG cigarettes and alcohol are costing North-East shopkeepers on average £56,000 each a year in lost sales, new figures have claimed.

The illegal trade is hitting the region the hardest and confirms its position as Britain's biggest market for smuggled contraband.

Scores of small shop owners across the country were asked in a survey how much they were losing to the trade each week. Average yearly losses in the North-East were £56,640 - up by £20,000 on the national average for each shopkeeper.

The survey by the Independent Retail News publication is expected to lead to renewed calls for a cut in duty ahead of Chancellor Gordon Brown's budget next month.

Rob Hastings-Trew, North-East spokesman for Customs and Excise, said: "We want the public to be aware of the effect smuggled cigarettes and alcohol has on local shopkeepers.

The combined cost of smuggled tobacco and alcohol to the Government is put at £4.25bn a year.

Profits from illegal contraband often end up with criminal gangs and fund other illegal activities.

The North-East has been the subject of a series of high-profile customs operations in recent years in a bid to crack down on the problem.

Mr Hastings-Trew said: "The make-up of the North-East, with a great number of people on low incomes, makes it the sort of area likely to be targeted heavily by organised criminals and we are fully aware of this."

Sixty-six per cent of retailers surveyed said they had been offered bootleg goods in the past six months, and nearly ten per cent knew of stores that had been forced to close.