One in eight British shops could be forced to close within three years, says a report due to be released this week.

Figures from Company Watch will contribute to a report conducted by former Iceland chief executive Bill Grimsey, to be published this Wednesday.

Grimsey’s analysis concludes that 20,000 retailers have liabilities larger than their assets.

The review, based on research by Company Watch containing more than 40,000 companies, will focus on unfair business rates, expensive parking and the surge in the popularity of online shopping which have weakened high street retail businesses.

Commenting in The Sunday Telegraph, Grimsey said: “Recession, austerity policies, an unfair business rates regime, changing consumer behaviour and the relentless march of online shopping have all combined to weaken the retail sector so fundamentally that nostalgic dreams of a high street rebirth based on old-style bricks-and-mortar retailing are simply foolish.”

He added that almost half of the UK’s 44,000 retail companies are in the “warning area” of Company Watch, with a financial health rating of 25 or less out of a possible 100.

“Over the past 15 years, statistics show that a quarter of these 20,500 troubled retailers will fail in the next three years.

“Retail may not be the anchor for the high street of the future, but more footfall will surely help to drive a retail revival.”

Today, Mary Portas will appear before MPs to discuss her 2011 report, designed to revive the British high street.