Retailers warn of £7bn spike in costs from Budget measures

19th Nov 2024 12:34

(Sharecast News) - More than 80 leading retail leaders signed an open letter to Chancellor Rachel Reeves on Tuesday, expressing grave concerns about the economic impact of the Autumn Budget on the retail sector.

The signatories, representing businesses ranging from high street giants to independent retailers, warned that the proposed measures would burden the industry with an estimated £7bn in additional costs by the end of 2025, threatening jobs, investment, and affordability for consumers.

According to the British Retail Consortium, retail - the UK's largest private-sector employer - contributed more than £100bn annually to GDP and directly employed three million people.

However, the letter highlighted how measures including National Insurance Contribution (NIC) changes, an increased National Living Wage, and a new packaging levy would significantly raise costs across the sector.

The NIC threshold adjustment alone was projected to cost £1.76bn, with the cumulative effect likely to exacerbate inflation and force job cuts, particularly in entry-level and part-time roles, the retailers warned.

Adding to the strain, they noted that business rates were set to increase by £140m in April, compounding the challenges retailers faced.

Industry leaders argued that current proposals failed to deliver meaningful relief and merely redistributed costs within the sector.

Retailers, which the BRC said already paid 55% of profits in business taxes, operated on tight margins of 35 to 5%, leaving little room to absorb additional expenses.

The retailers cautioned that the pressures could lead to shop closures, slower wage growth, and weakened high streets, impacting communities nationwide.

They urged the government to consider phasing in NIC changes, delaying packaging levy implementation, and revisiting business rates to ease the financial burden.

Reporting by Josh White for Sharecast.com.