A significant rise in national insurance contributions could weigh heavily on UK businesses.
- Primark’s CEO anticipates an increase in costs by tens of millions due to new NI thresholds.
- The changes proposed in the Autumn Budget target high street businesses, affecting their financial dynamics.
- The lowered NI threshold is expected to challenge urban retailers more than others.
- Primark’s recent financial success underscores its unique challenges amid these changes.
The Chancellor’s decision to raise national insurance contributions from 13.8% to 15% represents a notable shift in cost structure for businesses across the UK. George Weston, CEO of Associated British Foods, has expressed concern over the increased financial burden this change imposes on high street retailers like Primark. According to The Times, Weston stated that businesses will see their expenses surge by ‘tens of millions’, specifically affecting high street city centre operations.
The updated policy, scheduled to come into effect from April 2025, introduces a lowered threshold of £5,000 for employers to begin paying national insurance, down from the previous £9,100. This adjustment is set to impact urban businesses more significantly, as they constitute a substantial portion of the high street economy. Weston emphasised that these changes would disproportionately affect these entities, pointing out their vulnerability in the current economic landscape.
Despite these financial challenges, Primark has reported a striking 51% increase in its adjusted operating profit, reaching £1.1 billion. This growth is attributed to robust sales figures, which rose by 6%, driven by the brand’s appeal through value-focused clothing, a distinct shopping environment, and enhanced online engagement. Such achievements highlight the dual nature of Primark’s current position, navigating impressive performance metrics alongside impending fiscal pressures.
Primark must strategise to maintain its growth momentum in light of rising national insurance costs.
