Government policy is driving up inflation and job losses, according to concerned retail finance chiefs.
Ahead of the Chancellor’s upcoming Budget, the British Retail Consortium (BRC) surveyed chief financial officers (CFOs) and finance directors in the retail sector.
When asked about the consequences of the last Budget, which saw huge increases to employer National Insurance and National Living Wage, 85% of CFOs said their businesses had been forced to raise prices, with two-thirds (65%) predicting further rises in the coming year.
Job security appeared to be at risk, as 42% of CFOs said they had frozen recruitment, while 38% said they had reduced job numbers in-store.
Investment in local communities has also suffered. Over a third (38%) of CFOs suggested they had reduced investment, while one in six (15%) had already delayed opening new stores.
Nine out of ten CFOs identified tax and regulatory burden as their biggest financial fear. This included worries related to National Insurance, Business Rates, National Living Wage and the new Extended Producer Responsibility (EPR) packaging tax.
This concern has increased by over 20% since January, when only 62% of CFOs ranked in among their top three worries.
As the largest private sector employer, offering huge numbers of part-time and entry-level roles, the changes to the NI threshold and National Living Wage have had a disproportionate impact on both retailers and their supply chains, who together employ 5.7m people across the country, said the BRC.
The government has pledged to reform the business rate system, reducing rates for some retail, hospitality and leisure outlets, by creating a new higher threshold for large non-domestic properties, including 4,000 retail stores.
The trade body said large stores account for hundreds of thousands of retail jobs, and play a vital role in attracting footfall to high streets and other shopping destinations, benefitting smaller businesses around them.
“Retail was squarely in the firing line of the last Budget, with the industry hit by £7 billion in new costs and taxes. Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable,” said Helen Dickinson, chief executive at the BRC.
“It is up to the Chancellor to decide whether to fan the flames of inflation, or to support the everyday economy by backing the high street and the local jobs they provide.”
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