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UK retail warns of inflation and job losses from budget, seeks Reeves meeting
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LONDON (Reuters) – Britain’s biggest retailers have written to finance minister Rachel Reeves to warn her that last month’s budget will make both
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)
Frequently Asked Questions about UK retail warns of inflation and job losses from budget, seeks Reeves meeting
1What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It indicates a decrease in the value of money.
2What is National Insurance?
National Insurance is a system of taxes paid by employees and employers in the UK to fund state benefits, including pensions and unemployment benefits.
3What are business rates?
Business rates are taxes paid by businesses on the property they occupy. The rates are based on the estimated value of the property and are used to fund local services.
