Britain’s retailers are facing the prospect of significant job cuts as they deal with rising taxes and employment costs, following a disappointing holiday shopping season. The British Retail Consortium (BRC) reported minimal sales growth of just 0.4 per cent year-on-year for the critical October to December period, with inflation-adjusted sales declining. Retailers, including Tesco and Marks & Spencer, have warned that a £7bn increase in costs from higher taxes and new regulations could force them to cut jobs or raise prices.
The government’s planned £25bn increase in employer national insurance contributions and a 6.7 per cent rise in the national minimum wage are adding to the strain. Analysts predict that these costs, combined with persistent inflation, could lead to further job losses in the retail sector. A recent forecast shows that food inflation could rise by 3 per cent in 2025, driven by these policies.
Retail sales growth was also hampered by shifts in consumer spending, with households prioritising food and drink over discretionary items. Retailers are struggling to cover rising costs through higher sales, and many are increasingly relying on online sales to boost revenue. However, the growth in e-commerce is not enough to offset the pressure on high-street stores, which saw only a 0.1 per cent growth in the final quarter of 2024.
With wages rising more slowly than inflation, businesses are forced to make difficult decisions, including job cuts. Industry leaders have warned that without government intervention to ease these financial burdens, the retail sector could face widespread layoffs in 2025.
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