Two-thirds of the country’s biggest retailers have warned. They will have to raise prices to cope with rising tax bills due to Chancellor Rachel Reeves’ budget.
British Retail ConsortiumThe firm, whose members include companies such as Marks & Spencer and Boots, said 67 per cent of the 52 financial bosses it surveyed said they would raise prices in response to a rise in employers’ National Insurance contributions from April.
More than half said they would cut their paid hours and overtime, while 46 percent said they would have to reduce the number of staff in stores and 31 percent said rising costs would require more automation. will cause
Businesses in general, and retailers In particular, claim they will be hit hard by a tax hike aimed at raising £20bn for the Treasury. Retailers often employ employees at relatively low wages and often on tighter margins than most companies.
They say this means Ms Reeves’ decision to lower the threshold for paying tax from £9,100 to £5,000 hits them particularly hard.
Helen Dickinson, chief executive of the BRC, said: “With the Budget adding more than £7 billion to their bills in 2025, retailers now face difficult decisions about future investment, employment and pricing. is
“As the largest private sector employer, employing many part-time and seasonal workers, changes to National Insurance limits have a disproportionate impact on both retailers and their supply chains, which Together they employ 5.7 million people.
“Retailers have worked hard to protect their customers from higher costs, but with slow market growth and margins already thin, it’s inevitable that consumers will bear some of the burden.
He said that the majority of retailers had no choice but to raise prices in response to these rising prices, and that food inflation was expected to rise steadily throughout the year.
“Local communities could find themselves with fewer high streets and fewer retail jobs,” Ms Dickinson said.
Louise McLean, director of the Signature Group, which operates bars, restaurants and hotels, said on Tuesday that hospitality firms such as pubs and restaurants would be taking a “huge gamble” when it comes to meeting these costs.
He told BBC Radio 4’s Today programme: “Everything has to grow by about 10 per cent if we want to stay in business.
“We’re seeing a raft of hospitality closures. We’re seeing people put back for hours. You only have to go round George Street in Edinburgh at this time of year and 50 per cent of venues are closed on Mondays and Tuesdays. are
Rachel Reeves has defended her decision to raise taxes. BudgetBy insisting on his plan, he provided the stability needed to secure growth and fix the country’s services.
About 70 percent of finance owners surveyed said they were “pessimistic” or “very pessimistic” about business conditions over the next 12 months, while only 13 percent said they were “optimistic” or “very optimistic.” “Hopeful.”
The biggest concerns, cited by more than 60 percent of chief financial officers, were declining demand for goods and services, inflation of goods and services, and rising tax and regulatory burdens.
The survey comes after 81 retail chief executives wrote to the chancellor with their concerns about the economic consequences of the Budget, which claims changes to employers’ National Insurance contributions, National Living could cost the industry £7bn in 2025. can increase more than Wage hike and revised packaging levy.
Finance majors also suggested that shop price inflation, currently at -1 percent, will average 2.2 percent in the second half of 2025.
The BRC reported last week that food inflation is expected to average 4.2 percent in the second half of this year.
According to the Office for National Statistics, food inflation was 2 percent annualized in November. Up from 1.9 percent a month ago.
The findings come as chancellor Rachel Reeves faces pressure amid market turmoil.
It comes as Sir Keir Starmer appeared to waver in his support for the chancellor after he said he had confidence in her but refused to say she would retain her role until the next general election.
Downing Street clarified hours later that Ms Reeves would remain in office for “the whole of this Parliament”.