New polling from the British Retail Consortium (BRC) shows significant concern among retail finance chiefs, who say government policy is driving up inflation and job losses.
A survey of CFOs (Chief Financial Officers) and Finance Directors at retailers together representing over 9,000 stores comes as the Chancellor is preparing for the next Budget.
Given concerns about potential tax rises on the horizon, 56% of CFOs described their feelings about trading conditions over the next 12 months as “pessimistic”, with only 11% suggesting they were optimistic (33% were neither optimistic nor pessimistic).
When asked about the consequences of the last Budget, which saw huge increases to employer National Insurance and National Living Wage, 85% of CFOs said their businesses had been forced to raise prices, with two-thirds (65%) predicting further rises in the coming year. Given inflation has been rising steadily over recent months, with food inflation now at 4.0% (BRC-NielsenIQ Shop Price Monitor), the BRC now predicts food inflation will be up to 6% by the end of the year. This will pose significant challenges to household budgets, particularly in the run up to Christmas.
Jobs were also at risk: 42% of CFOs said they had frozen recruitment, while 38% said they had reduced job numbers in-store. This was reflected in the official job figures, with almost 100,000 fewer retail jobs in the first quarter of 2025 compared to the previous year. Investment in local communities has also suffered. 38% of CFOs suggested they had reduced investment, while one in six (15%) had already delayed opening new stores.
The biggest financial fear – those appearing in almost 9 out of 10 CFOs “top 3 concerns for their business” (88%) – was the “Tax and regulatory burden” which included worries around National Insurance, Business Rates, National Living Wage and the new packaging tax (EPR). This was up over 20 percentage points from January, when 62% of CFOs had it in their top 3 concerns.
As the largest private sector employer, offering huge numbers of part-time and entry-level roles, the changes to the NI threshold and National Living Wage have had a disproportionate impact on both retailers and their supply chains, who together employ 5.7m people across the country.
The Government has pledged to reform the broken business rate system, reducing rates for some retail, hospitality and leisure (RHL) outlets, by creating a new higher threshold for large non-domestic properties, including 4,000 retail stores. These large stores account for hundreds of thousands of retail jobs, and play a vital role in attracting footfall to high streets and other shopping destinations, benefitting smaller businesses around them.
Helen Dickinson, Chief Executive at the BRC, said: “Retail was squarely in the firing line of the last Budget, with the industry hit by £7 billion in new costs and taxes. Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable. The consequences are now being felt by households as many struggle to cope with the rising cost of their weekly shop. It is up to the Chancellor to decide whether to fan the flames of inflation, or to support the everyday economy by backing the high street and the local jobs they provide.
“Retail accounts for 5% of the economy yet currently pays 7.4% of business taxes and a whopping 21% of all business rates. It is vital the upcoming reforms offer a meaningful reduction in retailers’ rates bill, and ensures no store pays more as a result of the changes. If instead, the Chancellor chooses to add further costs to retailers and high streets, it will be the British public who suffer from the knock-on impact on inflation.”
