As businesses brace for tax increases set to take effect next April, consumers may soon feel the pinch at the checkout. Two prominent industry leaders have warned that these changes will inevitably lead to higher prices in shops and pubs across the UK.
Andy Higginson, chair of JD Sports and the British Retail Consortium, has highlighted that a rise in National Insurance contributions will significantly affect consumers. The new rate will increase to 15% on salaries above £5,000, compared to the current 13.8% on salaries exceeding £9,100. Additionally, minimum wages are also scheduled to rise.
Higginson expressed urgency about the situation, stating that without gradual implementation of these tax hikes, consumers should prepare for “significant inflation in prices.” He urged the government to consider a phased approach over the next two to three years.
Simon Emeny, CEO of Fullers—a chain that operates about 400 pubs and hotels—echoed these concerns by indicating that drink prices could rise within six months. Emeny criticized the Budget as lacking support for working people and growth-oriented policies, suggesting it may ultimately restrict investment.
The recent Budget included a staggering £40 billion in new taxes, with more than half of this burden falling on employers. The National Insurance increase alone is expected to generate an additional £25 billion annually.
Emeny pointed out that many businesses have yet to fully recover from their losses during the Covid-19 pandemic. He revealed that the proposed measures could impose an extra £3.5 billion in costs on the hospitality sector alone.
He emphasized that sectors like hospitality cannot simply absorb these rising costs without passing them along to consumers.
With the average price of a pint of draught lager currently at £4.47, some pub owners are already contemplating price hikes of up to 40p due to these new financial pressures.
The Budget’s implications raise pressing questions about its alignment with pro-growth promises made by Labour prior to elections. As businesses grapple with economic uncertainty and increased taxation, industry leaders are calling for a strategy that fosters growth rather than stifles it.
Higginson remarked on the “worrying” backdrop created by this Budget at a time when economic recovery is essential. With family finances tightening, retailers are adjusting their strategies, including focusing on niche markets like kidults. Meanwhile, shop workers continue facing challenges in their work environments as they navigate customer frustrations amidst rising costs.
As businesses prepare for these changes, consumers should remain vigilant regarding how these fiscal policies may affect their everyday expenses.
Entertainer Toy Shop Chain Halts Expansion Plans Amid National Insurance Hike The Entertainer toy shop chain has announced it will not proceed with plans to open two new stores, a decision driven by recent government changes to National Insurance (NI) Contributions.
Minimum wages are set to increase in April, with the National Living Wage rising to £12.21 per hour, as confirmed by the chancellor ahead of Wednesday’s Budget announcement.