An increasing number of the UK’s retailers will be forced to close down if businesses are hit with a further round of tax increases in the autumn, the head of the British Retail Consortium (BRC), Helen Dickenson, has warned, as fresh data from the body found that nearly nine in 10 high street bosses are struggling with the tax burden.
Dickenson said that the prices rise, job cuts and investment reduction that retailers have had to carry out in response to last year’s budget would “accelerate (and be) worse” if the Treasury opted to raid the sector again at October’s fiscal event.
“What we saw last year was a step change in the cost base”, she said. “If there is another step change in the cost base, impacts we’ve already started to see over the last six to nine months would only accelerate”. Retail is among the worst affected sectors from the Chancellor’s decision to mount an unprecedented tax raid on the private sector at last year’s Budget. Along with the hospitality industry, retailers were especially exposed to the £25 billion hike to employer national insurance contributions (NIC), because of their reliance on large quantities of relatively low-paid and part-time staff.
Parallel to the NIC’s rise, retailers also shouldered an above-inflation hike to the minimum wage, which the BRC has estimated will costs its members over £2.7 billion annually in higher wage bills. It chalked up the overall damage to the sector from the Budget at £7 billion.
Several high street stalwarts — including Homebase, Hobbycraft and latterly River Island — have been pushed into administration since the changes were announced. And late in July, insolvency specialist Beggies Traynor judged the retail industry to have endured the third most extreme rise in businesses under “critical financial distress” over the past year.
Dickenson warned that the failure of more household names from her industry would be a “natural consequence” of another bout of tax rises.
“It wouldn’t just be more of the same”, she said in reference to the effects that a higher tax burden would have on her body’s members.
“It would have an acceleration and we would see more business failures. These are all well-loved businesses and recognisable brands”, she added, highlighting that when a retail chain closes “it isn’t just the closure of a business. It is the loss of something that is part of the heritage of the country”. Separately, the CBI’s latest business optimism index, found negative sentiment endures across sectors, with confidence having taken a hit every month since last year’s budget. The last positive reading it received for firms’ expectations on output volumes for the following three months was in August last year, it said.
Meanwhile, on a separate issue, Shawbrook is lining up a London IPO in this (second) half of the year in a much needed-boost to the capital’s public markets. The business lender is going ahead with plans that target a valuation of as much as £2 billion. The firm’s private equity owners had been seeking an exit but market volatility had deterred earlier plans for a London listing.
The lender is controlled by private equity firms BC Partners and Pollen Street Capital. The report will raise hopes of a revival of London’s lacklustre stock market. A number of billion-pound London banking and fintech businesses from Zilch to Zopa are considering an IPO but have been waiting for the right market conditions to materialise.
Shawbrook’s profit before tax fell to £294 million in the 2024 financial year. This was down from £302 million in 2023. But the firm did manage to boost its deposit and loan book, driven by commercial and retail markets.
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