UK budget draws mixed reaction from retail groups

While the decision to permanently cut business rates for smaller premises was welcomed, industry leaders voiced concern that additional charges on larger stores and employment reforms may curb growth and hiring.

Helen Dickinson, chief executive of the British Retail Consortium (BRC), described the budget as "a mixed bag", saying that measures designed to reduce business rates offered relief to many shops but simultaneously added costs for larger retailers. She argued that these mixed incentives "do little to support retail investment and job creation" and leave the sector facing a delicate balancing act as businesses try to invest, recruit and keep prices affordable.

“All in all, we will see winners and losers across retail and the impact for consumers will unfold in the coming months, but this budget does not go far enough to mitigate the inflationary pressures already bearing down on the industry,” Dickinson said.

Under the business rates overhaul, retail sites with a rateable value below £500,000 (~$0.66 million) will receive a 5p permanent reduction. However, larger stores, including supermarkets and high-street anchor retailers, will face a new surtax. Larger stores, which already pay one third of the industry’s business rates bill and employ around a million people, should have been exempted from a surtax intended to fund support for the high street, BRC said in a release.

“The 5p rates reduction for retail, hospitality and leisure properties with a rateable value below £500,000 is unlikely to fully fix the situation where retail, as 5 per cent of the economy, pays over 20 per cent of all business rates,” Dickinson said.

The budget confirmed an uplift to the National Living Wage (NLW), in line with expectations from the Low Pay Commission, which the BRC said would at least provide certainty for financial planning. But sharp increases in the minimum wage for under-21s raised fears of a slowdown in youth hiring.

Dickinson said combined pressures from employer National Insurance and wage changes have already added £5 billion to retail labour costs in the past year, amid 100,000 retail job losses.

The Confederation of British Industry (CBI) welcomed policies such as the protection of capital spending, support for innovation, adherence to the corporate tax roadmap and the hiring of additional planning officers. However, it said the budget still missed an opportunity to deliver broader reforms that would strengthen business investment and job creation.

“The government’s growth mission is currently stalled. While the Chancellor has succeeded in creating the fiscal headroom she needed, a scattergun approach to tax risks leaving the economy stuck in neutral. One of the biggest things the government can do right now is get round the table with business to find a landing zone on the Employment Rights Bill that works for everyone,” Rain Newton-Smith, chief executive of the Confederation of British Industry (CBI), suggested.

The BRC backed the closure of the de minimis loophole for low-value imported goods but said the 2029 implementation date undermines the measure. Dickinson called for urgent action as 1.6 million parcels enter the UK daily, double last year’s volume. Eliminating the exemption would protect consumers from imports failing environmental or ethical standards and support domestic competition, she said.

ALCHEMPro News Desk (HU)