A New year’s Budget blow for Prime Minister Keir Starmer as retailers have issued a warning of the impact of the budget with price hikes and job cuts.
Retailers will be particularly hard hit by chancellor Rachel Reeves’s planned hike to employers’ national insurance.
Retailers warn of price hikes and job cuts
The British Retail Consortium and global accounting firm KPMG said costs are projected to eclipse sales growth this year, forcing traders to pass higher prices onto consumers.
BRC chief executive Helen Dickinson said the crucial quarter between October and the end of December had “failed to give 2024 the send-off retailers were hoping for” after a year she said was marked by weak consumer confidence and difficult economic conditions.
The British Chambers of Commerce (BCC) said its survey of nearly 5,000 firms suggested confidence had “slumped”, falling to its lowest level for two years.
Nearly two-thirds told the BCC they were worried about taxes following the Budget, which announced a rise in national insurance contributions (NICs) paid by firms from April.
A Treasury spokesperson said the Budget delivered stability for business and more than half of employers would either see a cut or no change in their National Insurance bills.
A report from KPMG has forecast that the pace of growth will pick up this year, with the economy growing by 1.7% compared with 0.8% in 2024.
It expects consumers to “ramp up the pace of spending” as household incomes are boosted by stonger pay growth and lower interest rates.
However, KPMG warned the pick-up in growth “could come at a cost of higher and more persistent inflation, as businesses pass on the cost of tax rises”.