Major British retailers including Tesco, Sainsbury’s and Boots have issued a warning to Rachel Reeves that raising taxes in the autumn Budget could contradict her plans to improve UK living standards.
Some of the county’s biggest chains have signed a letter to the Chancellor sent by trade body British Retail Consortium (BRC).
It warns that further tax rises on businesses could result in the Labour Government breaking its manifesto pledge to provide “high living standards”.
“Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk,” the letter reads.
Many businesses have seen their labour costs rise thanks to the rate of employer national insurance being increased in last year’s Budget.
Some retailers have blamed the tax hike for the decision to raise prices in shops, which they say has allowed them to partly mitigate the impact.
Others have resorted to cutting staff or freezing hiring, while some businesses said they were absorbing the higher costs into their profits.
But in the letter signed by more than 60 chief executives, it says: “As retailers, we have done everything we can to shield our customers from the worst inflationary pressures but as they persist, it is becoming more and more challenging for us to absorb the cost pressures we face.”
The national minimum wage also increased in April, providing a boost to low-income workers across the UK.
However, businesses say the overall jump in staff costs, coupled with new taxes on plastic packaging, have added £7 billion in costs.
The BRC also cited rising food and drink inflation, which hit 4.9% last month, with items like coffee, chocolate, meat and juice becoming more expensive.
It is expecting the inflation rate to reach 6% later this year, “driving up household bills just as winter energy costs start to kick in”, the trade body said.
“As the chief executives of many of Britain’s leading brands, we are determined to help deliver your growth ambitions,” the letter read.
“However, for this to be possible, the conditions for stable prices, continued investment and sustainable employment must be at the heart of this year’s Budget.”
The BRC is calling for a significant reduction in business rates on retail, hospitality and leisure firms, and assurances that no shops will pay more tax than they currently do.
The Treasury has been contacted for comment.
