The UK's largest retailers have issued a stark warning to Finance Minister Rachel Reeves, stating that last month's budget will drive up prices, lead to job losses, and hamper investment.

In a letter organized by the British Retail Consortium (BRC) and signed by 79 retail leaders—including executives from Tesco, Marks & Spencer, Sainsbury's, Next, Asda, Morrisons, Kingfisher, Amazon UK, and Boots—the industry has requested a meeting with Reeves to discuss potential solutions.

The October 30 budget, introduced by the Labour government, includes measures that have alarmed the retail sector. Employers' National Insurance contributions are set to rise by 1.2 percentage points to 15% from April 2024, alongside a reduction in the threshold at which firms start paying, from £9,100 to £5,000 annually. Additionally, the minimum wage for most adults will increase by 6.7% in April.

The letter highlights that the retail industry, which directly employs three million people and supports 2.7 million jobs in its supply chain, is bracing for an estimated £7 billion ($8.8 billion) annual cost increase by 2025. This figure includes higher business rates and new packaging levies.

"Absorbing such significant cost increases within a short timeframe is unfeasible," the letter stated. "The consequences will include higher inflation, slower wage growth, shop closures, and job reductions, particularly for entry-level positions."

The retailers are urging the government to phase in the new lower earnings threshold for National Insurance, delay the rollout of packaging levies, and accelerate proposed reforms to business rates.

Despite these concerns, Prime Minister Keir Starmer defended the budget measures on Saturday, stating, "I will stand by these decisions all day long." Photo by Lauren Hurley / No 10 Downing Street, Wikimedia commons.