Concerns Mount as Retail Giants Brace for Price Increases and Job Cuts More than 70 retail businesses have expressed their alarm to the Chancellor regarding impending price increases and potential job reductions. A prominent high street fashion company, Next, has issued a stark warning: forthcoming government tax adjustments are likely to lead to a rise in prices for consumers. Next anticipates a staggering £67 million increase in employee costs within the upcoming year, which will in turn be reflected in the prices shoppers pay.
The British Retail Consortium has projected that the resultant economic impacts from these tax changes could land a hefty £2.3 billion bill on the retail sector. In a recent statement, Next highlighted that it may have to implement an unwelcome 1% increase in prices. This adjustment is attributed to a rise in employer National Insurance contributions (NICs), which were announced in the previous year’s Autumn Statement by Chancellor Rachel Reeves and are set to take effect in April. Compounding this issue, an increase in the minimum wage will further escalate operating costs for the retailer. Next has foreseen a notable slowdown in sales growth in the coming financial year, as the ramifications of increased employer taxes, together with their potential effects on both pricing and employment, begin to ripple throughout the economy.
In its latest figures, the retailer reported a better-than-expected 5.7% growth in underlying full-price sales for its fourth quarter and has raised its full-year pre-tax profit forecast to an impressive £1.01 billion—a 10% increase. However, for the fiscal year ending January 2026, sales growth is expected to decelerate to 3.5%, with group profits predicted to rise modestly by 3.6% to £1.05 billion. Next is not alone in grappling with these challenges.
New research from the British Chambers of Commerce reveals that over half of the surveyed companies plan to raise prices by early April. In a poll involving more than 4,800 businesses, 55% indicated an expectation of price increases in the upcoming three months—a significant rise from the 39% recorded in a similar survey conducted in late 2024. The primary concern for three-quarters of these companies relates to employment costs, leading the director general of the British Chambers of Commerce, Shevaun Haviland, to describe the situation as a “pressure cooker of rising costs and taxes.” She pointed out that businesses are already scaling back investments and are poised to raise prices in the near future. Additionally, the impending tax changes have prompted retailers like New Look to accelerate plans for store closures ahead of the NIC increase.
Retail Sector Faces Severe Challenges in 2025 The Centre for Retail Research (CRR) has painted a grim picture for the current year, predicting that approximately 17,350 retail locations may shut down. This forecast follows a difficult 2024, which saw the closure of 13,000 retail shops—a 28% increase compared to the previous year. Professor Joshua Bamfield, director of the CRR, remarked that while the figures for 2024 were not as dire as those in 2020 or 2022, the outlook for 2025 remains concerning. The retail landscape has already witnessed significant turmoil, with nearly 170,000 retail jobs lost in 2024 alone—a staggering 41.9% increase from the year prior. The CRR’s end-of-year analysis attributes these losses to the collapse of high-profile retailers, including Homebase and Ted Baker. In total, 169,395 retail employees were impacted last year, marking the highest annual job loss rate since the height of the COVID-19 pandemic.
As we look ahead, experts warn that small high street shops face particularly daunting prospects due to upcoming tax and wage alterations. Professor Bamfield predicts that retail job losses could soar to 202,000 in 2025. He cautioned that escalating operational costs coupled with the increasing financial strain on households could lead to an unprecedented wave of job cuts, potentially surpassing the disruptions seen during the pandemic.
Other Businesses Feel the Pinch More than 70 companies, including industry giants like Tesco, Asda, and Sainsbury’s, have signaled to Rachel Reeves in an open letter that the tax alterations outlined in the Autumn Budget will inevitably lead to price increases. These adjustments are set to take effect in April, which has prompted various retailers—including Greggs, Mitchells and Butlers (the owner of Toby Carvery), and Wetherspoon—to alert their customers about forthcoming price hikes.
As the retail environment continues to shift in response to economic pressures, consumers and businesses alike will have to navigate the implications of these changes in the months ahead.
