Retail Chief Warns Shoppers Are Preparing for Higher Taxes

Author:

 

What’s the Warning About

  1. Retailers Are Concerned About Upcoming Tax Hikes
    • Major UK retailers (Tesco, Sainsbury’s, M&S, and more) are warning that further tax rises could force them to raise prices. (Upday News)
    • Specifically, they cite business-rate increases, national insurance (NI) costs, and other regulatory burdens as key pressures. (BRC)
    • According to a poll by the British Retail Consortium (BRC), 88% of retail CFOs say “tax and regulatory burden” is among their top 3 business worries. (BRC)
  2. Higher Costs May Be Passed On to Consumers
    • Retailers argue that because their margins are thin, they may not be able to absorb the full cost of higher taxes — meaning prices for goods could go up. (Upday News)
    • There is a real risk of food price inflation: supermarkets warn that including large stores in a proposed business-rates surtax could push food prices even higher. (Sky News)
    • For many retailers, recent tax and policy changes have already had a big financial impact. For example, Sainsbury’s said a rise in employer NI cost them £140 million. (Express & Star)
    • A new packaging tax (extended producer responsibility) is also adding “tens of millions” to costs for some retailers. (Express & Star)
  3. Consumer Behavior Is Changing
    • According to Sainsbury’s CEO, shoppers are delaying non-essential spending because they’re uncertain about what the November 26 Budget will bring. (Yahoo Finance)
    • This cautious consumer sentiment could weigh on retail sales — especially in a critical pre-Christmas period. (Reuters)
  4. Risk to Jobs and Investment
    • The BRC survey found that due to rising cost pressures:
      • 42% of retail CFOs said they’d frozen recruitment.
      • 38% said they’d reduced in-store jobs. (Business Money)
    • Also, 38% of retail CFOs said they had scaled back investment; 15% delayed opening new stores. (Business Money)
    • So the risk isn’t just to prices — there’s a concern about job losses and weaker growth in retail.
  5. Retailers’ Call to the Government
    • Retail leaders are urging the Chancellor (Rachel Reeves) not to pile on more costs. (The Guardian)
    • They argue that raising taxes further — especially business rates or NI — could worsen inflation, reduce consumer spending, and damage high-street jobs. (BRC)
    • Helen Dickinson, chief executive of the BRC, has warned that retail is “squarely in the firing line” and that any additional costs will ultimately be borne by households. (BRC)

Why Retailers Are “Preparing” for Higher Taxes

  • The phrase “preparing for higher taxes” comes from both retailers and consumers. Retailers expect cost pressures to continue, and consumers are reacting by being more cautious with their spending.
  • Retailers are essentially saying: “If the government raises taxes more, we may have no choice but to pass those costs on. Customers should brace themselves.”

Bottom Line

  • Retail leaders are warning of a double risk: more tax hikes could force them to raise prices and they may need to cut jobs or delay expansion.
  • From a consumer perspective, this could mean higher costs for food and other goods, especially if a major tax policy change is announced.
  • There’s a real tension: the government needs revenue, but retailers argue that squeezing them more will hurt consumers and the broader economy.
  • Good question. Here are some key case studies, comments, and real-world examples that illustrate the concern among retail leaders — plus some of the reactions.

    Case Studies & Key Comments

    1. British Retail Consortium (BRC) Survey / Retail CFOs
      • A recent BRC survey of CFOs from over 9,000 stores found 88% cite “tax and regulatory burden” as one of their top-3 business worries. (BRC)
      • According to the survey, 56% of those CFOs feel pessimistic about trading conditions over the next 12 months. (Business Money)
      • On the last Budget (which raised employer National Insurance and the National Living Wage), 85% of those finance chiefs said they had already raised prices. (BRC)
      • Two-thirds (65%) expect further price rises in the next year. (Business Money)
      • In terms of jobs: 42% said they’ve frozen recruitment, and 38% are reducing in-store headcount. (Business Money)
      • On investment: 38% reported cutting back on investment; 15% are delaying opening new stores. (Business Money)
    2. BRC / Retail Sector’s Tax Burden
      • Helen Dickinson, CEO of the BRC, warned:

        “Retail was squarely in the firing line … the industry hit by £7 billion in new costs and taxes.” (BRC)

      • She also highlighted the disproportionate burden: retail makes up 5% of the UK economy, yet pays 7.4% of business taxes and 21% of all business rates. (Business Money)
      • She argued that reforms to business rates must be meaningful, otherwise “every store pays more … it will be the British public who suffer … the knock-on impact on inflation.” (Business Money)
    3. Sainsbury’s
      • Simon Roberts, CEO of Sainsbury’s (which also owns Argos and Habitat), said shoppers are already delaying discretionary spending because of uncertainty ahead of the Budget. (The Guardian)
      • He pointed to a £140 million rise in Sainsbury’s employer National Insurance cost, plus “tens of millions” in new packaging regulation / recycling costs. (The Guardian)
      • Roberts also warned against further tax rises: “What we don’t want … is further impacts that may cause further inflation.” (The Guardian)
      • On business rates, he said policymakers need to understand how “unfair a tax [rates] are … why it impacts jobs.” (The Guardian)
    4. Marks & Spencer (M&S)
      • Stuart Machin, CEO of M&S, strongly criticized the government’s tax approach: he said retailers are being “raided like a piggy bank” under proposed tax rises. (The Guardian)
      • He called for a phased implementation of lower NIC (national insurance) thresholds and a review of business rates changes. (The Guardian)
      • On packaging regulation: Machin warned that the Extended Producer Responsibility (EPR) scheme could impose much higher costs, estimating that “£2bn” could go straight to the Treasury without corresponding recycling benefits. (The Guardian)
    5. Sector-wide Letter to the Chancellor
      • Retailers (including big names like Tesco, Sainsbury’s, Next, and JD Sports) jointly warned the Chancellor (Rachel Reeves) that the “cumulative burden” from employer NIC, wage increases, and other regulations makes job losses inevitable and higher prices a certainty. (Sky News)
      • They also stressed that retail margins are very tight: many retailers operate on ~3–5% profit margins, so absorbing big cost increases is difficult. (Sky News)

    Why These Warnings Matter: Key Themes

    From the above case studies and comments, you can see several recurring themes:

    • Thin Margins: Retailers argue they don’t have a lot of room to absorb big tax increases without passing on costs.
    • Employment Risk: Because of higher labor costs, some retailers are freezing hiring, reducing in-store staff, or even delaying expansion.
    • Inflation Risk: If retailers pass on costs, that could further fuel inflation, especially on food.
    • Policy Tension: Retailers are asking the government to reconsider or phase in tax changes (NICs, business rates, packaging levies) to soften the blow.
    • Consumer Behavior: Some execs observe shoppers being more cautious or delaying spending, possibly in expectation of more tax-driven price hikes.

 

Categories: GB News, UK News