By Aysu Bicer
LONDON (AA) - Some of the UK’s largest retailers have warned that rising costs, exacerbated by recent tax hikes in the budget, will lead to inevitable job losses, shop closures, and higher prices for consumers.
Tesco, Amazon, Greggs, Next, and dozens of other retail giants have joined forces to urge the Treasury to reconsider these 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 a year in costs to a sector already grappling with tight profit margins of just 3% to 5%.
The signatories warned that the changes would make it impossible to absorb these costs, leading to inflation, slower wage growth, and reduced job opportunities, particularly for young people.
A key focus of the retailers’ criticism is the employer National Insurance (NI) tax increase, introduced in the budget.
Bank of England Governor Andrew Bailey acknowledged the retailers’ concerns during a Treasury Committee hearing on Tuesday, agreeing that the changes could impact jobs.
Bailey warned that the tax hike could result in higher inflation, slower wage growth, or increased unemployment, adding that the bank would take a "gradual" approach to interest rate cuts in light of these pressures.
Retail and hospitality businesses, which employ large numbers of young workers and are already bracing for a significant rise in the minimum wage next year, are expected to bear the brunt of these changes.
The letter from the British Retail Consortium (BRC) emphasized the speed and scale of the cost increases, calling them "unmanageable."
"The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level," the letter stated.
The government has defended its tax increases as necessary to safeguard public services and has received backing from trade unions for its minimum wage rise, which includes a notable boost for younger workers and apprentices.
However, the measures have drawn sharp criticism from the business community.