The UK’s largest retailers have written to the Chancellor, Rachel Reeves, requesting an urgent meeting to address impending employment cost increases. Set to take effect from April 2025, these measures include a 1.2% rise in employer national insurance contributions (NI) and a lower payment threshold of £5,000, alongside a hike in the national living wage. Together, these changes are projected to cost the retail sector £5.06 billion annually, including £2.33bn in employer NI and £2bn in wage increases.
Over 80 retail leaders, representing brands such as Aldi, Tesco, Sainsbury’s, and Boots, warn that the short notice makes it impossible to absorb these costs without job cuts, reduced investment, and potential shop closures. The British Retail Consortium stated, “This will increase inflation, slow pay growth, and harm high streets nationwide.”
The retail sector, which employs over three million people directly and contributes £100bn annually to GDP, will be disproportionately affected. Brick-and-mortar stores are particularly vulnerable due to rising business rates.
The consortium’s recommendations include phasing in the lower earnings threshold, delaying the packaging tax, and expediting the business rates review. Retailers have emphasised the urgency of collaborating with the Government to mitigate these pressures. Failure to act, they caution, risks significant harm to jobs, communities, and the UK economy.
Talk to us about your business.