Warning retail job cuts ‘inevitable’ after NI tax rise in Budget

High Street job losses are “inevitable”, prices will rise, and shops will close because of tax rises in the Budget and other rising costs, a group of the biggest retailers in the UK is warning.

Tesco, Amazon, Greggs, Next, and dozens of other chains are urging the Treasury to reconsider some of the measures.

In a letter to Chancellor Rachel Reeves, they said the “cumulative burden” of the Budget changes and other policies already in the pipeline will add billions in costs to a sector with a 3% to 5% profit margin.

A Treasury spokesperson said the government had had to “make difficult choices to fix the foundations of the country”.

Measures in the Budget, in particular a rise in the tax that firms pay on their staff’s wages, have been met with a tide of criticism from business, who argue it will hold back growth.

But concerns have been loudest among retailers and hospitality businesses, where many young people find their first jobs. Firms in those sectors are also facing higher costs from next year’s rise in the minimum wage.

However, though many individual retailers have already spoken out, this letter marks the first time so many have done so together.

The 79 signatories of the letter range from big British retailers – such as Aldi, Asda, Boots, Currys, Lidl, Marks & Spencer, Primark, and Sainsbury’s – to charity shop group the British Heart Foundation and trade group Associated Independent Stores.

The government has defended its tax rises as necessary to avoid cuts to public services, and the rise in the minimum wage, with a bigger boost for younger workers and apprentices, has been welcomed by trades unions.

But the letter from the group of businesses belonging to the British Retail Consortium (BRC) said: “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.”

It calculated the changes would add over £7bn a year in costs to their businesses and said it would “not be possible to absorb such significant cost increases over such a short timescale”.

“The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level.”

BRC chief executive Helen Dickinson told the BBC’s Today programme the letter highlighted the “strength of feeling” among retailers.

From next April, all large businesses will have to pay higher National Insurance Contributions (NICs) for every member of staff they employ.

Employer NICs will start at a lower threshold than now, at £5,000 instead of £9,100, and the rate will rise from 13.8% to 15%. The BRC calculates this will cost British retailers £2.33bn a year.

The rise in the minimum wage from April is set to cost the sector a further £2.73bn, the BRC letter said.

In addition, from October 2025 a new packaging levy comes into force.

Introduced by the previous government, the extended producer responsibility (EPR) scheme shifts the cost of recycling from local councils onto the companies that use the packaging. Smaller firms are exempt, but the new levy will cost the retail sector overall another £2bn, the BRC estimates.

One of the letter’s signatories was the chief executive of High Street fashion stores Monsoon and Accessorize, Nick Stowe.

He told the Today programme that the Budget changes meant his business was “going to have to divert investment that we would have made in growing our store base into protecting the stores that we have and the employees that we have”.

He added that the whole retail sector was concerned that it was being forced into doing things “that seem to be entirely counter to the government’s agenda in terms of growing the economy and growing sectors like ours”.

Freddie Colquhoun, investment director at JM Finn, told the BBC he had been meeting small and medium sized businesses in the retail, hospitality and recruitment sectors and “they’re all struggling, they’re all finding the same issues coming straight down the line on to them”.

“I think they are certainly looking at the amount of people they will continue to employ, they’ll also be looking at the salaries they’re going to be paying people,” he added.

The letter from the retailers calls for the government to phase in the introduction of the NI changes and delay the start of the EPR.

It urges the government to reduce business rates, a property-related tax which the BRC says will cost retailers an additional £140m a year after next April.

A Treasury spokesperson told the BBC that, thanks to exemptions for smaller businesses, “more than half of employers will either see a cut or no change in their national insurance bills [and] there will be £22.6bn more for the NHS”.

A business update from Begbies Traynor on Monday gave some weight to the BRC’s warnings. The consultancy predicted more firms in financial difficulty would need its insolvency advice due to both the NI change and higher interest rates.