New polling by the British Retail Consortium (BRC) highlights concern among retail finance chiefs, who say government policy is driving up inflation and job losses.
The survey of Chief Financial Officers and Finance Directors at retailers, which together represent over 9,000 stores, comes as Chancellor Rachel Reeves prepares for her next Budget.
Amid concerns about potential tax rises on the horizon, 56% of CFOs described their feelings about trading conditions over the next 12 months as “pessimistic”, with only 11% suggesting they were optimistic (33% were neither optimistic nor pessimistic).
When asked about the consequences of the last Budget, which saw significant increases to employer National Insurance and National Living Wage, 85% of CFOs said their businesses had been forced to raise prices, with two-thirds (65%) predicting further rises in the coming year.
Inflation has been rising steadily over recent months, with food inflation hitting 4.0% this month (BRC-NielsenIQ Shop Price Monitor). The BRC predicts food inflation could now hit 6% by the end of the year, posing challenges to household budgets, particularly in the run-up to Christmas.
Jobs are also at risk: 42% of CFOs said they had frozen recruitment, while 38% said they had reduced job numbers in-store. This was reflected in the official job figures, with almost 100,000 fewer retail jobs in the first quarter of 2025 compared to the previous year. Investment has also suffered, with 38% of CFOs stating that it has been reduced, while 15% have already delayed new store openings.
The biggest financial fear – those appearing in almost 9 out of 10 CFOs “top 3 concerns for their business” (88%) – was the “Tax and regulatory burden” which included worries around National Insurance, Business Rates, National Living Wage and the new packaging tax (EPR). This was up over 20 percentage points from January, when 62% of CFOs had it in their top 3 concerns.
The government has pledged to reform the business rate system, reducing rates for some retail, hospitality and leisure (RHL) outlets, by creating a new higher threshold for large non-domestic properties, including 4,000 retail stores. The BRC has previously warned that the move would deal another blow to already struggling town centres, noting that large stores account for hundreds of thousands of retail jobs and play a major role in attracting footfall to high streets and other shopping destinations, benefitting smaller businesses around them.
“Retail was squarely in the firing line of the last Budget, with the industry hit by £7bn in new costs and taxes,” Helen Dickinson, Chief Executive at the BRC.
“Retailers have done everything they can to shield their customers from higher costs, but given their slim margins and the rising cost of employing staff, price rises were inevitable. The consequences are now being felt by households as many struggle to cope with the rising cost of their weekly shop. It is up to the Chancellor to decide whether to fan the flames of inflation or to support the everyday economy by backing the high street and the local jobs they provide.”
She concluded: “Retail accounts for 5% of the economy, yet currently pays 7.4% of business taxes and a whopping 21% of all business rates. It is vital that the upcoming reforms offer a meaningful reduction in retailers’ rates bill, and ensure no store pays more as a result of the changes. If, instead, the Chancellor chooses to add further costs to retailers and high streets, it will be the British public who suffer from the knock-on impact on inflation.”
