In a significant move, over 70 major UK retailers, including Tesco, Sainsbury’s, and Marks & Spencer, have sent a letter to Chancellor Rachel Reeves expressing their concerns about the impact of rising business costs.

A major concern highlighted in the letter is the increase in employer national insurance contributions, which will rise from 13.8% to 15% starting in April 2025, adding substantial costs on top of employee wages.

This proposed National Insurance hike is projected to impose a £7 billion financial burden on retailers, prompting fears of job losses and store closures.

While retailers acknowledge the government's focus on fiscal improvement, they stress that the rapid rise in costs creates a significant burden that could lead to inevitable job losses and higher prices.

Retailers assert they cannot quickly absorb these cost increases, which they believe will result in inflation, slower wage growth, and a reduction in entry-level jobs.

Nick Stowe, CEO of Monsoon and Accessorize, emphasized that retailers are faced with difficult choices, having to choose between maintaining staff numbers and canceling investment plans.

He pointed out that the limited options available to retailers do not support growth and contradict the government's goals of economic expansion.

Stowe's comments were made during an interview on BBC Radio 4's Today programme, where he discussed the tough decisions retailers must navigate.

The British Retail Consortium (BRC) organized the letter, which the Treasury reportedly sought to downplay, reflecting the gravity of the situation.

In defense of their budget decisions, the Treasury cited a need to address a £22 billion fiscal deficit inherited from the previous government, arguing that many employers would see no increase in their national insurance bills.

However, retailers warn that the upcoming changes from the October Budget could lead to shop closures, job losses, and price hikes, as they struggle to cope with the increased financial pressures.

Overall, the situation underscores the challenging landscape for UK retailers as they navigate rising costs while trying to sustain their businesses.