Retailers warn chancellor Budget risks job losses and price rises

Retailers have said the rise in National Insurance for employers makes “job losses inevitable, and higher prices a certainty”.

During the Budget, on 30 October, Rachel Reeves increased National Insurance contributions by employers from 13.8% to 15%. She acknowledged it was a "difficult choice" and one she did not take lightly.

Now, almost 80 retail bosses have signed a letter by the British Retail Consortium (BRC) criticising the decision, they include AllSaints CEO Peter Wood, H&M CEO and country manager Henrik Nordvall, JD Sports Group CEO Regis Schultz and M&S CEO Stuart Machin.

The letter states: “We are writing to share our significant concerns about the impact of the Budget on the retail industry and the economic consequences for inflation, employment and investment.”

They say the changes could mean a rise of up to £7bn a year for the retail sector.

“We appreciate [the] government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this. 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, “ the letter states.

It goes on to say, retail is “already one of the highest taxed business sectors, along with hospitality, paying 55% of profits in business taxes”.

“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.”

The group called for a meeting with Reeves to discuss the concerns and to "work together on a solution”.

“By adjusting the timings of some of these changes, the government would give businesses time to adjust and greatly mitigate their harmful effects on high streets and consumers.”

They say the discussion could include:

On National Insurance, phasing the introduction of the new lower earnings threshold.

On packaging levies, delaying the timelines for implementation.

On business rates, revisiting the proposals announced at the Budget and bringing forward the timetable so benefits can be realised earlier.