Retailers warn chancellor that prices will rise if more tax is imposed in autumn Budget

The retailers, part of the BRC, say that in a period of high inflation and a cost of living crisis they have done everything to “shield our customers from the worst inflationary pressures,” but it is becoming more challenging to “absorb” the cost.

The letter has been signed by chief executives of Boots UK, Asda, John Lewis, JD Sports, Morrisons, Tesco, Primark, and Sainsbury’s. Along with the BRC, it raises concerns that food inflation could hit 6% this year.

Retailers are already stomaching higher costs from last year’s Budget, as £7bn in new costs was added to retail businesses due to changes in employer national insurance, raises in the national living wage and a new packaging tax. 

They mention that 100,000 retail jobs have also been lost over the past year as a result of falling retail investment.

The retailers also warned that the government could go against its manifesto: “Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk.

“Instead, the retail industry is uniquely placed to help deliver the Government’s central economic mission given our presence in almost every community across the UK.

“We are committed to investing in our businesses and providing good quality jobs for people at all stages of their career, whether that’s someone entering the workforce for the first time, wanting flexible work to fit around their family commitments or returning to work later in life.

“We compete fiercely and continue to keep a laser focus on prices and value for our customers, absorbing cost pressures wherever we can.”

The letter continues to say it supports Labour’s plan to lower business rates on retail, hospitality and leisure, and adds that there should be a “significant reduction” in the tax burden.

“No store should pay more as a consequence, with all shops excluded from the new higher multiplier. As we have outlined to your officials, these outcomes can be achieved at no cost to the Exchequer.”

The letter concludes: “As the Chief Executives of many of Britain’s leading brands, we are determined to help deliver your growth ambitions. However, for this to be possible, the conditions for stable prices, continued investment and sustainable employment must be at the heart of this year’s Budget.

“We see it as a key moment for the Government to publicly buy into retail and the vital role the industry can play in helping deliver a stronger and more resilient economy for all.”

The BRC expects that more signatures will come in, this article will be updated accordingly.