UK’s largest retailers raise alarm over impact of tax hikes in national budget
Date
11/21/2024 6:57:56 AM
(MENAFN) Several of the UK's largest retailers have raised alarm over the impact of recent tax hikes in the national budget, warning that the rising costs will inevitably lead to job losses, shop closures, and higher prices for consumers. Retail giants such as Tesco, Amazon, Greggs, Next, and many others have united to call on the Treasury to reconsider these fiscal measures. In a joint letter to Chancellor Rachel Reeves, 81 leading retailers, including Aldi, Asda, Boots, and Sainsbury’s, expressed their concerns about the "cumulative burden" of policies that could add over £7 billion in annual costs to an industry already struggling with narrow profit margins of only 3 percent to 5 percent.
The signatories of the letter cautioned that these new financial pressures would make it impossible for the sector to absorb the additional costs, which could result in inflation, reduced wage growth, and fewer job opportunities, particularly for young workers. A focal point of their criticism was the increase in the employer National Insurance (NI) tax, introduced in the budget, which the retailers argue would exacerbate financial strain. Bank of England Governor Andrew Bailey acknowledged these concerns during a Treasury Committee hearing, agreeing that the changes could lead to negative consequences for employment, particularly in the retail and hospitality sectors, which employ large numbers of young workers.
Bailey warned that the tax hike could contribute to higher inflation, slower wage growth, or potentially higher unemployment, especially as businesses already face the upcoming challenge of a significant rise in the minimum wage next year. Retail and hospitality sectors are particularly vulnerable to these fiscal changes, as they operate with tight profit margins and a large proportion of entry-level jobs. The British Retail Consortium (BRC) emphasized that the speed and scale of these cost increases are "unmanageable," further underlining the serious risks they pose to the sector’s stability.
The letter concluded with a strong warning that these measures would inevitably lead to shop closures, reduced employment, and increased prices, especially for lower-income consumers. With inflationary pressures set to rise, retailers predict that the negative effects will be felt most acutely by young workers and those seeking entry-level positions, who are most reliant on retail and hospitality jobs.
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