Councillors are expected to agree the deal next week in recognition of the difficult trading conditions at the market and in Castlegate in general, where a number of shops, offices and pubs are being boarded up. Some market traders are already in arrears.

The rent reduction is also intended to go towards the stallholders' costs in relocating to a purpose-built complex due to open on The Moor in the autumn of 2010 after years of uncertainty.

Even now, there are no guarantees. "There remains a risk, particularly in the present economic climate, that the new market development could be delayed," says the council's executive director of development, environment and leisure, David Curtis, in a report to the council's cabinet on Wednesday.

One hundred and thirty businesses in the Castle Market are currently offered a range of discounts – from 5% to 46% – depending largely on their location within the building.

The National Market Traders' Federation suggested a flat discount rate of 50% and negotiations with the council over the past year have produced the 40% figure.

It is hoped that the lower rent, to be backdated to April, will encourage more stallholders to set up business – the occupancy rate at Castle Market is 88%.

But the council estimates it is likely to have to find £300,000 a year over three years to meet the shortfall in income, money it is earmarking from the land deal on The Moor with developers RREEF.

Mick Cull, secretary for the Castle Market branch of National Market Traders Federation, said: "This discount is much needed to help traders survive in a climate that, at the moment, that is very difficult. This will help us prepare for the transition to the new market on the Moor."

Coun Sylvia Anginotti, cabinet member for employment and enterprise, said the discount would help the financial position for the majority of businesses and traders in Castle Market.

"We want to make the market more sustainable as a place of employment and enterprise."

lThe council is running a campaign to encourage shoppers to "beat the credit crunch" by using the Castle Market.

Latest figures indicate that the numbers of customers are slightly higher than last year.



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