Major UK Retailers Warn of Job Losses and Price Increases Due to New Tax Measures
A coalition of 79 leading retailers, including Tesco, Amazon, Greggs, Next, Aldi, Asda, and Marks & Spencer, has issued a stark warning to the Treasury about the potential economic consequences of upcoming tax increases and additional costs.
The British Retail Consortium (BRC) has written a letter to Chancellor Rachel Reeves highlighting the “cumulative burden” of new financial measures, which they estimate will add £7bn in costs to businesses next year. The retailers argue that these increases will lead to inevitable job losses, higher prices, and shop closures.
Key financial challenges facing retailers include:
1. National Insurance Contributions (NICs):
– From April, large businesses will pay higher NICs
– The threshold will drop from £9,100 to £5,000
– The rate will increase from 13.8% to 15%
– Estimated cost to retailers: £2.33bn annually
2. Minimum Wage Increase:
– Expected to cost the retail sector an additional £2.73bn
– Particularly impacts sectors with many entry-level positions
3. Packaging Levy:
– Coming into effect in October 2025
– Extended producer responsibility (ERC) scheme shifts recycling costs to companies
– Estimated to cost retailers £2bn
4. Business Rates:
– Expected to add £140m in annual costs
The retailers argue that with typical profit margins between 3% and 5%, absorbing these significant cost increases is impossible. They warn that the effects will include:
– Increased inflation
– Slowed pay growth
– Shop closures
– Reduced jobs, especially entry-level positions
The group is calling on the government to:
– Phase in National Insurance changes
– Delay the start of the packaging levy
– Reduce business rates
The Treasury has defended its approach, stating that more than half of employers will see no change or a cut in their national insurance bills. They argue that these measures are necessary to support public services and the NHS.
Supporting the retailers’ concerns, a business update from Begbies Traynor predicted an increase in insolvency and business recovery services due to these financial pressures.
The warning comes at a challenging time for the retail sector, which is already facing economic uncertainties. While the government maintains that these are difficult but necessary choices to stabilize the economy, retailers fear the immediate and long-term consequences of these additional financial burdens.
The diverse group of signatories, ranging from major supermarkets to charity shops, underscores the widespread concern within the retail industry about the potential economic impact of these new measures.
