The 81 businesses warning to slash jobs as Reeves’s ‘heartbreaking’ budget takes hold | Personal Finance | Finance

calico 11/29/2024

A coalition of some the UK’s largest retailers, including Tesco, Amazon, John Lewis, and Aldi, has warned that Labour’s Autumn Budget could lead to widespread job cuts, higher prices, and shop closures.

In a joint letter to Chancellor Rachel Reeves, the group criticised the tax hikes and other measures as creating a “cumulative burden” that could devastate the retail sector.

Representing 81 major businesses, the British Retail Consortium (BRC) estimates that new costs from the Autumn Budget, combined with policies already in motion, will add over £7billion annually to a sector operating on slim profit margins of just 3% to 5%.

Starting in April, larger businesses will face increased employer National Insurance Contributions (NICs), with thresholds dropping from £9,100 to £5,000 and rates rising from 13.8% to 15%. According to the BRC, this change will cost British retailers £2.33billion a year.

Retailers will also have to manage a £2.73billion increase from the minimum wage hike next year, as well as a £2billion cost tied to a new packaging levy taking effect in October 2025.

These combined measures are expected to push up inflation, slow wage growth, and lead to job losses, particularly for entry-level positions.

In their letter, the retailers stated: “The sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”

The hospitality sector, already grappling with rising costs, also predicts severe consequences from the budget measures. Owen Morgan, co-founder of the 44 Restaurant Group, described the plans as “anti-business,” “anti-growth,” and “short-sighted.”

He told The Times: “As founders, we have spent the last few weeks literally working 24/7 trying to evaluate, forecast, adjust, and plan how to save the business because of the budget.

“For a company like ours, staunchly family-run and already having to tread water and consolidate after the events of the last four years, it’s heartbreaking.”

He added: “Rather than opening their ears and listening to experienced people, they have done the opposite and hammered us. We will be employing fewer people. Sadly, there is no other option.”

The minimum wage increase, meanwhile, has been largely welcomed by unions, particularly for its benefits to younger workers and apprentices.

The Government has defended its tax increases, emphasising their necessity to protect public services. A Treasury spokesperson stated that “difficult choices” were necessary to “fix the foundations of the country,”.

Meanwhile one union criticised the letter. Nadine Houghton, GMB Union national officer, said larger businesses “pleading poverty” was “utterly pathetic”.

She added: “Most of these companies’ fortunes are already subsidised by the taxpayer. They pay very low wages which then have to be topped up by in-work benefits. It’s only right that they should now contribute a bit more to rebuilding our country.”

However, Bank of England Governor Andrew Bailey acknowledged the retailers’ concerns, cautioning it was “right” to say jobs could be affected.

The 81 companies that signed the letter include: