The upcoming cost increases from the recent budget are causing concern among UK businesses.
- Morrisons CEO Rami Baitieh has appealed for a more gradual approach to the planned cost changes.
- National Insurance contributions are set to increase, significantly impacting large retailers.
- Employers across the country warn of potential job losses and price hikes due to cost surges.
- The retail industry faces a collective rise in annual costs, estimated to reach £7 billion.
The upcoming cost increases following the October Budget have raised significant concerns among UK businesses, particularly within the retail sector. Morrisons CEO Rami Baitieh has reached out to the government, requesting that they stagger the implementation of these changes. His focus is on avoiding an ‘avalanche of costs’ impacting businesses all at once.
One of the critical adjustments includes a rise in National Insurance contributions. Starting in April 2025, the contributions will increase from 13.8% to 15% on earnings above £175 a week. Baitieh emphasized the substantial financial burden this change poses, with reports suggesting it will cost Morrisons approximately £75 million. Baitieh voiced his concerns, likening the situation to “adding insult to injury,” emphasizing the need for a phased approach to these financial adjustments.
Major UK supermarkets, such as Sainsbury’s and Tesco, have also highlighted the financial impacts of these changes. Sainsbury’s forecasts a £140 million hike in its National Insurance bill, while Tesco could see an additional £1 billion added to its costs over the next four years. The National Insurance increase, combined with the rising national minimum wage and new packaging levies, could surge the retail sector’s costs by approximately £7 billion annually.
In a letter, over seventy companies, including leading retailers and supermarkets, expressed their collective concerns to the Chancellor, stating potential outcomes such as job cuts and increased prices. They urged a reconsideration or delay in these measures to allow businesses time to adapt without compromising employment or inflating consumer prices.
Considering these proposals, a phased approach to cost implementation could support economic stability.
