EDINBURGH'S notorious tramworks have caused a catastrophic collapse in the number of shoppers visiting the city centre.

A new report by business leaders reveals areas dug up to make way for new tramlines have been deserted by visitors in their droves.

The Essential Edinburgh Trends Report shows footfall dropped significantly in key areas affected by tramworks throughout March, compared to the same period last year.

In one of the hardest-hit streets, Shandwick Place in the west end – which has been plagued by roadworks for several years – the number of shoppers plunged by one-third, from 373,600 to 195,700.

In Princes Street, there was a 14.2% fall in pedestrians to 834,350.

George Street had a huge rise in the number of visitors to 418,400, but that is believed to have been skewed by a counting machine being placed at a bus stop area where traffic rerouted from Princes Street now runs.

The havoc caused by the tramworks, allied with other economic factors, saw sales turnover fall in February by 7.2% compared to the same month last year, the report showed.

It also revealed the current sales figure for Edinburgh compares less favourably with the Scottish average, which fell by 0.6%, and the UK average, which rose by 2.3%.

The news comes after The Herald revealed 223 Edinburgh shops and other firms have lodged compensation claims estimated to be worth more than £5 million for revenue lost due to tramworks.

It is thought around 100 businesses on Princes Street could be the first to receive a 20% discount on business rates or an equivalent package.

Around 100 more smaller companies in the city's west end are in line to receive a rates reduction that will save them between £5000 and £10,000.

The troubled trams project has already hit taxpayers hard, with a bill of £776m, up from £545m, for the route between Edinburgh Airport and St Andrew Square.

Andy Neal, chief executive of Essential Edinburgh, said: "The report highlights the underlying weakness in consumer confidence that is leading to a downturn in retail sales revenue. As Edinburgh has once again performed below Scotland and UK figures, the impact of tram disruption is clear.

"New footfall counters utilising the latest technology are now in place and, although not directly comparable, clearly show more people on George Street where the buses now run, with reductions on Princes Street and a drastic reduction in Shandwick Place where the tramworks have had a dramatic effect. It appears that tramworks are currently ahead of schedule and we are confident that Princes Street will be back to normal by the end of June and the work in St Andrew Square will be completed by Christmas."

Meanwhile, business leaders have piled pressure on the Scottish Government to help them recover from the financial crisis by calling on firms to take legal action to lower their bills.

Stuart Patrick, chief executive of Glasgow Chambers of Commerce, said he is backing members who want to appeal their business rates.

A growing number of firms across Scotland have launched legal battles against local assessors' offices, saying their business rates are too high.

The Herald revealed yesterday that many firms, including household names such as Bank of Scotland and The Body Shop, have gone to court to get their bills cut.

Companies are up in arms because the amount they pay in rates was decided in 2008, just months before the financial crisis engulfed the UK.

Rates are based on commercial properties' rentable value and are set by assessors on behalf of the Scottish Government. They are collected by local authorities, who also oversee the valuation process, but the money ultimately goes to the Government to redistribute.

Mr Patrick said: "This is a particularly unhappy state of affairs because the valuations were done at the very peak of the market but the bills arrived after the downturn. We have been directing any members who have concerns to the appeals process."