The recent decision by Chancellor Rachel Reeves to raise employers’ National Insurance contributions has sparked significant concern among UK retailers, who warn of inevitable job losses and price increases.
UK retailers, including major supermarkets and numerous other companies, have expressed alarm at the implications of Chancellor Rachel Reeves’ budgetary decision to increase employers’ National Insurance contributions. In a letter addressed to Reeves and reported by The Times, over 70 businesses, such as Tesco, Sainsbury’s, Asda, and Morrisons, have voiced their concerns. They argue that the National Insurance hike, along with the rise in the national minimum wage and new packaging levies, could escalate the retail industry’s costs by up to £7 billion annually. Other notable signatories of this letter include Amazon, Boots, and JD Sports.
From April 2025, the changes will see employers’ National Insurance contributions rise from 13.8% to 15% on earnings above £175 per week. Retailers emphasise that such significant cost increases over a short period are unsustainable. “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale,” they noted. This, they warn, will likely result in increased inflation, slowed pay growth, shop closures, and job reductions, particularly affecting entry-level positions across the UK.
The British Retail Consortium (BRC), which facilitated the collective response from retailers, plans to engage with the Chancellor to seek a collaborative solution. The BRC’s letter highlights the cumulative burden of these costs, suggesting that without intervention, job losses and price hikes are assured outcomes. Sainsbury’s CEO, Simon Roberts, and Asda chairman, Lord Stuart Rose, have publicly addressed their financial challenges, noting that their respective companies face additional costs of £140 million and £100 million.
In response, a Treasury spokesman justified the difficult budget choices by citing the need to address a fiscal deficit left by previous administrations. The spokesman argued that such measures are necessary to stabilise the economy, allocate £22.6 billion more to the NHS, and protect workers from higher taxes.
The dialogue between retailers and the government highlights the tension between fiscal policy and economic impact on the retail sector. As discussions progress, the challenge remains to balance these increases with economic stability and growth.
The retail industry stands at a crossroads, grappling with the government’s fiscal policy changes. As the financial burden mounts, the collaboration between the British Retail Consortium and the government will be crucial in navigating these challenging times.
