A group of leading retailers has issued a stark warning to the Treasury, stating that hundreds of thousands of jobs in the retail sector are under threat due to unsustainable cost increases this year.
This is the latest in a series of warnings from the retail industry about the impending damage to jobs and investment on the British high street, as reported by .
The Retail Jobs Alliance (RJA), which includes Tesco, Marks & Spencer and B&Q-owner Kingfisher, has warned that retailers are facing "a perfect storm" of additional costs from April.
They predict that a higher national insurance bill, a new recycling tax and increased business rates will result in the loss of 300,000 jobs by 2030.
Stuart Machin, Chief Executive of M&S, stated over the weekend that "retail is being raided like a piggy bank and it’s unacceptable".
He added that "The blunt truth is... the budget means º£½ÇÊÓƵ retail will get smaller," and called for immediate action to stimulate growth.
Shadow Business Secretary Andrew Griffith commented: "Retailers are often the canary in the coalmine of the state of the economy. For major high street names to issue this stark warning shows that no one’s economic future is safe. Although Labour’s cabinet has no real experience of business, surely, they must heed the warnings and change course now."
The retail sector has been grappling with a series of challenges since the 2008 financial crisis, including the rise of online shopping, lingering effects of Covid-19, and high taxes, according to the Centre for Retail Research (CRR).
Approximately 85,000 shops have shuttered since 2018.
Even by early 2023, customer footfall was down 10% compared to 2019 levels, with the decline more pronounced in major cities.
Britons have shifted their spending towards experiences such as dining out, city breaks, gym memberships, and streaming service subscriptions, leaving less disposable income for in-store purchases.
Analysts and businesses alike have warned that recent budget changes will exacerbate these issues, with an already hefty tax bill set to increase by £4.5bn, as per the British Retail Consortium (BRC).
The BRC attributes £2bn of this increase to the new packaging levy and £2.33bn to higher national insurance contributions (NICs).
Retail businesses, which heavily rely on part-time workers and operate on slim margins of three to five per cent, are expected to be particularly hard hit by the changes to employer NICs.
Peel Hunt has projected that retail firms within their coverage will experience an average pretax profit drop of 7.5 per cent due to the Budget's tax increase, with some firms being more severely impacted than others.
"Retail and hospitality are among the most exposed sectors to [budget] cost pressures," stated Tim Black, associate director at Frontier Economics.
He added: "In low-margin, highly competitive markets, there’s limited room to absorb higher costs – instead they’ll ultimately need to be passed on through higher prices, or cutbacks made to jobs – as a large group of retailers warned the Chancellor in November."
High street companies have long criticised business rates, essentially council taxes for shops, describing them as "antiquated".
This is because only high street stores pay this tax while online stores pay a lower tax on warehouses.
In Labour's first Autumn budget, changes to business rates were announced: relief on the tax, previously at 75 per cent, will decrease to 40 per cent this April. The tax is also set to rise in 2026.
Business rates are determined by a shop's 'rateable value', which is the annual rent the commercial property could have been leased for on the open market. The next adjustment to business rates, scheduled for 1 April 2026, will be based on rental values as of 1 April 2024.
The government has announced plans to introduce two permanently lower tax rates for retail, hospitality, and leisure properties with rateable values under £500,000 – a bracket that currently includes around 1,900 superstores – starting from 2026. However, the specifics of this reform remain unpublished.
With changes to rateable values, a greater number of stores are expected to hit the £500,000 threshold. The Retail Jobs Alliance (RJA) is urging the º£½ÇÊÓƵ government to "remove shops from the higher rate business rates multiplier," according to a spokesperson.
The group emphasises that such a move would benefit 'anchor stores' on high streets, which are key in attracting shoppers. "This change would provide much-needed relief for at-risk stores, enabling them to reinvest in their businesses, retain staff, and grow their footprint on the high street."
Initially formed in 2022 to address concerns over high business rates, the RJA has renewed its efforts this year amidst escalating challenges within the sector.
