Kroger will close all its British stores by March 2017 after the supermarket chain failed to agree a deal with the government to sell its UK operations to a new operator.

Kroger has so far refused to sell stores in the UK to the company called Lids, which it says is “fit and proper” for the role.

Krogers new operator, Lids Group, has been in talks with the Department for Business, Innovation and Skills since last summer.

“Kroger UK will be closing its doors by March 2019,” a statement from the company read.

“The decision was made with a view to meeting Lids operational requirements, including the closure of all stores, in the shortest possible timeframe.”

Kroger had said it was working with Lids to find a buyer for the stores, which were set to be closed by March 31, 2017.

But the company said it will not be buying back any of its UK stores and the UK Government has said it would not extend the “continuous closure” of all of its stores to meet Lids’ operational needs.

The decision comes at a time of high uncertainty around the UK’s financial health.

Lids is being run by a group of private equity firms including Bain Capital and the investment firm Bain Capital Partners.

Lid will be able to buy back the remaining stores.

LID CEO Simon Smith told the Financial Times in February that “there is no doubt that the UK economy is in trouble and that is why we need to act now to save the UK”.

The government has said there is no need for Kroger UK to be bought out and that the Government is committed to “continuing to protect the UK consumer”.

But it is expected that some retailers will have to close as a result of Lids sale.