Labour has been warned by some of the UK’s biggest retailers that shop closures, job losses and price rises may all be “inevitable” due to changes made in the October Budget.
In a letter to chancellor Rachel Reeves, more than 70 companies including Tesco, Sainsbury’s, Asda and Marks & Spencer warn that the “sheer scale” of rising business costs will have a “harmful effect” on customers and the high street.
It marks the first time that many of these household names have expressed concerns over the Budget. The letter was organised by the British Retail Consortium (BRC), with its publication reportedly discouraged by the Treasury.
Other business signatories include Amazon, Boots, Aldi, Lidl, Ocado, Morrisons, Greggs, Currys, B&Q, Burberry, JD Sports, Holland & Barrett, Oliver Bonas and Specsavers.
A key area of concern in the upcoming increase to employer national insurance contributions (NICs), rising from 13.8 per cent to 15 per cent in April 2025. This is a tax paid by employers on top of their employee’s wages.
Previously responding to criticism of the measure, the chancellor said businesses would “have to absorb some of this through profits” and that wage growth would be “slightly less.”
However, the group of retailers have rejected this, writing: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale.”
“The effect will be to increase inflation, slow pay growth, cause shop closures and reduce jobs, especially at the entry level.
“This will impact high streets and customers right across the country. We are already starting to take difficult decisions in our businesses and this will be true across the whole industry and our supply chain.
“We appreciate government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this,” they add.
“But, the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
A spokesman for the Treasury said: “With our public services crumbling and an inherited £22 billion fiscal black hole from the previous government, we had to make difficult choices to fix the foundations of the country and restore desperately needed economic stability to allow businesses to thrive.
“By doing this, more than half of employers will either see a cut or no change in their national insurance bills, there will be £22.6 billion more for the NHS and workers’ payslips will be protected from higher tax. This government is committed to delivering economic growth by boosting investment and rebuilding Britain.”