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

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 Consorti

By: cyprus-mail.com

Nov 19 2024
15
2836 Views

UK retail warns of inflation a

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 (TSCO.L), Marks & Spencer (MKS.L), Sainsbury’s (SBRY.L), Next (NXT.L), Asda, Morrisons, Kingfisher (KGF.L), 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 per cent 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 per cent 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”.