The recent Autumn Budget 2024 has stirred significant responses within the retail industry, reflecting both concerns and cautious optimism.
As the Chancellor declared, “through the central ‘growth mission’, the Government is restoring stability, increasing investment, and reforming the economy,” the implications of this statement are being critically assessed by retail leaders and stakeholders.
Go deeper with GlobalData
Key business tax changes
One of the standout announcements affecting the retail sector is the proposed introduction of lower multipliers for retail, hospitality, and leisure (RHL) properties with a rateable value (RV) under £500,000, effective from April 2026-27.
This shift, funded by higher multipliers on properties valued above £500,000, has been welcomed by many. However, uncertainty lingers over the overall impact of these reforms.
Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), expressed her reservations: “With retailers paying over 21% of all business rates in the economy, the solution is not to simply shift the burden around the industry, but to look outside retail.”
She highlighted that “today’s Budget will hit hard, with the odds now stacked firmly against growth and investment in the short term.” The anticipated increase in costs, alongside the proposed reforms, raises questions about the Government’s approach to supporting a sector that is crucial for economic recovery.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataIn response to the business rates changes, Dickinson further noted, “The measures will do nothing to help bigger brands that play such a key role in attracting shoppers and delivering investment for our high streets and town centres.”
The sentiment echoes across the industry, indicating a need for a holistic view of taxation that considers the nuances of the retail landscape.
National minimum wage and national insurance contributions
The decision to accept the Low Pay Commission’s recommendations on the National Minimum Wage (NMW) has also generated mixed feelings. The NMW for those aged 21 and over will rise to £12.21, a move that, while supported by retailers for its intent, adds to existing pressures.
Dickinson commented, “Investment plans and economic growth will be impacted given the larger-than-expected increase to NLW. This adds £367m more than pre-Budget expectations.”
Furthermore, the increase in National Insurance contributions (NIC) by 1.2%, pushing the total to 15%, adds another layer of complexity.
Andy Jones, Partner at EY UK, pointed out, “For retailers, the bottom line is that today’s Budget will likely result in increased cost pressures amid what is already a challenging backdrop.”
As retailers grapple with these rising costs, the potential for price increases for consumers looms large, creating a challenging environment for both businesses and customers alike.
Tackling retail crime
On a more positive note, the Chancellor’s commitment to addressing retail crime was met with approval across the sector. Dickinson welcomed the “firm stance on shoplifting,” citing that the industry suffers losses exceeding £1.8 billion due to such crimes.
The announcement of additional funding to combat this issue is seen as a crucial step toward supporting retailers.
Mo Razzaq, national president of the Federation of Independent Retailers, reinforced the need for tougher action against shoplifting, stating, “While there were some gains, there was also some pain for independent retailers at a time when our finances are being stretched to the limit.”
This sentiment highlights the precarious balance independent retailers must maintain as they face external pressures, from increased costs to rising crime rates.
A challenging terrain for retail businesses
The Autumn Budget 2024 presents a complex landscape for the retail sector. With a mix of supportive measures and significant cost increases, retailers are navigating a challenging environment.
As Dickinson aptly summarised, “We will continue to look at the detail of the Autumn Statement in the coming days,” reflecting the cautious approach many are adopting in response to this year’s announcements.
The road ahead remains uncertain, but the retail sector’s resilience and adaptability will be key to overcoming the challenges posed by these budgetary changes.
