High street retailers are facing 'terrible choices' after Budget tax rises

Retail sectors and hospitality are facing "terrible choices to make" over possible investment cuts and workforce reductions due to tax hikes announced in the .

Reports suggest could be confronted with a significant rise in its national insurance bill, prompting industry chiefs to urge the Chancellor to reconsider her budget proposals. announced a £25.7bn adjustment to employers’ national insurance contributions in last month's Budget, increasing both the rate of the tax and the threshold for payment.

Just last week, big-name retailers such as , , and cautioned against substantial financial impacts, hinting this may also exert additional pressure on consumers. According to The Sunday Times, Tesco is expected to see a £250m yearly cost due to changes in national insurance. Morgan Stanley's analysis—unchallenged by Tesco—projects around a £1bn burden over the current Parliament's lifespan.

Hospitality expert Luke Johnson, who currently invests in and directs bakery chain Gail’s, told Radio 4's Today programme that businesses will now confront "really tough choices". The former Pizza Express chairman has critiqued the financial measures, saying: "I think it’s a mistake because it’s a tax on jobs, a tax on work, it’s a regressive tax because it will hit low earners, and for labour-intensive businesses like hospitality or retail it’s enormously discouraging."

He further added: "It’s millions of pounds, and we have some terrible choices to make about whether we cut back on growth or we employ fewer people or we change shifts or other impacts. Gail’s is pretty successful, but I’m involved with other businesses that are still recovering from the devastations of lockdowns and energy inflation and they’re going to face some really tough choices."

In another part of the sector, restaurant group Various Eateries, which operates the Coppa Club chain, acknowledged that it too would feel the pinch from recent fiscal adjustments. The group observed that the national insurance changes and a 6.7% hike in the minimum wage "will substantially increase the costs and administrative burden of employing young people".