UK retail warns of inflation and job losses from budget, seeks Reeves meeting

Published On : 11/19/2024

LONDON (Reuters) – Britain’s biggest retailers have written to finance minister Rachel Reeves to warn her that last month’s budget will make both higher prices and job losses a certainty and dent investment.

The letter, coordinated by the British Retail Consortium trade body and signed by 79 retail bosses, including those at Tesco, Marks & Spencer, Sainsbury’s, Next, Asda, Morrisons, Kingfisher, Amazon UK and Boots, called for a meeting with Reeves to discuss their concerns and work on a solution.

The Labour government’s Oct. 30 budget statement raised employers’ National Insurance, or social security, contributions by 1.2 percentage points to 15% from April next year, and also lowered the threshold for when firms start paying to 5,000 pounds from 9,100 pounds per year. It also raised the minimum wage for most adults by 6.7% from April.

The letter said the UK retail industry, which has three million direct jobs and 2.7 million more in its supply chain, was facing a rise of 7 billion pounds ($8.8 billion) in annual costs from 2025 when higher business rates and the impact of new packaging levies are also taken into account.

“It will not be possible to absorb such significant cost increases over such a short time scale. The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level,” it said.

The retailers want the government to phase the introduction of the new lower earnings threshold for National Insurance, delay the introduction of packaging levies, and revisit and bring forward proposed changes to business rates.

On Saturday, Prime Minister Keir Starmer said he would defend decisions taken in the budget “all day long”.

($1 = 0.7924 pounds)

(Reporting by James Davey; Editing by Paul Simao)

Uma Rajagopal

Uma Rajagopal has been managing the posting of content for multiple platforms since 2021, including Global Banking & Finance Review, Asset Digest, Biz Dispatch, Blockchain Tribune, Business Express, Brands Journal, Companies Digest, Economy Standard, Entrepreneur Tribune, Finance Digest, Fintech Herald, Global Islamic Finance Magazine, International Releases, Online World News, Luxury Adviser, Palmbay Herald, Startup Observer, Technology Dispatch, Trading Herald, and Wealth Tribune. Her role ensures that content is published accurately and efficiently across these diverse publications.