The UK’s largest retailers have warned tax increases, combined with other rising costs, will lead to widespread job losses, store closures, and higher prices.
In a letter to Chancellor Rachel Reeves, companies like Tesco, Amazon, Greggs, and Next urged the Treasury to reconsider the proposed measures. They cited a “cumulative burden” that threatens the already strained retail sector.
A Struggling Sector Facing Rising Costs
The letter has been signed by 80 prominent businesses. It highlights the challenges of implementing the government’s policies within a sector operating on thin profit margins of just 3% to 5%.
Retailers argue the changes, including a rise in taxes on staff wages, will add more than £7 billion annually to their costs.
The British Retail Consortium (BRC), which organized the letter, expressed fears the cost pressures will:
- Make job losses “inevitable.”
- Force price increases, further fueling inflation.
- Lead to store closures across the UK.
- Reduce opportunities for entry-level workers.
The Treasury defended its decisions, stating that the measures are necessary to stabilize the economy and safeguard public services.
A spokesperson acknowledged the “difficult choices” made in the Budget but argued they were essential for long-term financial stability.
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What does the letter say?
“Retail is in every community and is vital to the socio-economic fabric of the UK. It is the largest private sector employer, with three million direct jobs and 2.7 million more in the supply chain, contributing over £100bn per annum to GDP.
“This scale and reach means the industry can be a partner to government, supporting the reinvigoration of high streets, creating jobs all over the country and supporting the government’s ambitions for growth.
“We appreciate 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.”
Retail and Hospitality at the Forefront of Criticism
The rise in taxes on employee wages has drawn particular criticism from businesses in retail and hospitality, where young people often secure their first jobs.
These sectors are also preparing for higher costs associated with the upcoming minimum wage increase, which will include a substantial boost for younger workers and apprentices.
While individual retailers have previously voiced their concerns, this letter marks the first coordinated response from such a wide range of businesses.
Signatories include:
- Aldi
- Boots
- John Lewis
- Marks & Spencer
- Primark.
- Sainsbury’s
Charities like the British Heart Foundation and trade group Associated Independent Stores have also contributed.
Calls for Government Action
The BRC’s letter warns the rapid introduction of these cost increases leaves businesses with little time to adjust.
It says:
“It will not be possible to absorb such significant cost increases over such a short timescale.”
The cumulative impact, it argues, will hinder pay growth and slow economic recovery. Retailers also fear inflation will rise, exacerbating pressures on consumers and businesses alike.
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Union Response
Unions, however, have pushed back against the retailers’ claims.
Nadine Houghton, national officer for the GMB Union, dismissed the concerns as “utterly pathetic,” accusing large businesses of “pleading poverty.”
Pointing to low wages in the sector that require top-ups through in-work benefits, she said:
“These companies are already subsidized by taxpayers.
“It’s only right that they should now contribute a bit more to rebuilding our country.”
A Critical Moment for UK Retail
The ongoing debate highlights a growing divide between businesses and government priorities.
Retailers argue that the current policy direction risks destabilizing a vital sector, while unions and the government maintain that the changes are necessary to support workers and public services.
As these measures take effect, all eyes will be on how the retail sector adapts and what it means for prices, jobs, and consumers in the months ahead.
