Retailers Hit Hard by Chancellor’s Tax Hikes, Slowing Hiring

Retailers Are Clicking the Panic Button

According to a CBI survey, UK retailers are stacking up price tags and trimming staff in a dramatic bid to survive a dip in consumer mood. The sector has just recorded the steepest drop in shopper sentiment in five years.

Job Losses on the Horizon

Employment in retail has already slid in the year up to May.
Heads count is expected to fall even faster next month – a painful‑but‑needed cutback.

Why the Crunch?

Autumn Budget 2024: Rachel Reeves raised employer NICs and the minimum wage, turning hiring into a pricier proposition.
Demand is flat‑lined, forcing retailers to pull back on both capital spending and, unfortunately, personnel.

Capital Expenditure: The Numbers Speak

Retailers plan to slash their investment by a sizable chunk over the next 12 months compared to the prior year. The outlook still only hovers on the scareier side of February’s weak reading — the lowest since the pandemic started.

Sales Trends

May saw a staggering 27% drop in year‑on‑year retail sales versus a mere 8% slump in April.
June is projected to rip deeper, with a 37% decline behind the back of stubbornly low demand.
Seasonally, New Year’s sales fell by 19%, yet still outperforms the 31% dip in April.
June’s sales curve is set to stay below the usual seasonal benchmark.

Business Sentiment Is Down, Folks!

Persisting gloom hits May hard, marked as the sharpest slide in five years. Retailers are feeling it acutely: the majority predict a business slump in the next quarter.

Trying To Keep the Lights On

Heads count is set to spiral further downward next month (a 20% cut).
Retail selling price inflation rose to 35% in the year to May, still a notch below the long‑run average of 41%.
Prices are forecast to push higher at an even faster pace (57%) next month.

Distribution Trends

All distribution sales (retail, wholesale, and motor trades) fell 43% year‑on‑year to May, the fastest decline since January 2021.

Industry Voice

Ben Jones, CBI Lead Economist, says: “Retail is in a mess, with fragile demand and higher employer costs pushing cuts. Digital sales look like a bright spot, but overall, the sector is feeling the strain. The upcoming Spending Review gives government a chance to rev up growth by tweaking rates, simplifying apprenticeship payments, or boosting Made Smarter programmes.”