Dozens of Britain’s biggest retailers have warned Rachel Reeves that her plans to hike National Insurance will cause staff to be laid off and shops to be shut.
Major companies including Tesco, M&S, Boots and B&Q have written to the Chancellor saying that job losses were now “inevitable”, as a result of the “sheer scale” of the new costs on business.
In a letter from over 70 companies, seen by The Times, Ms Reeves is told that the sector faces £7bn in increased costs as a result of changes to employers’ national insurance, a higher minimum wage rise and levies on packaging.
They say: “For any retailer, large or small, it will not be possible to absorb such significant cost increases over such a short timescale.
“The effect will be to increase inflation, slow pay growth, cause shop closures and reduce jobs, especially at the entry-level. This will impact high streets and customers right across the country. We are already starting to take difficult decisions in our businesses and this will be true across the whole industry and our supply chain.”
The retailers, which also include Amazon, Aldi, Lidl, Morrisons, Greggs, Currys, JD Sports and Specsavers, added: “We appreciate government’s focus on improving the fiscal situation and investing in public services; we also recognise the role businesses have in supporting this. But the sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty.”
It came as recruiters warned that tens of thousands of British jobs risk being moved abroad in response to the Budget.
Employers are plotting to shift roles to lower-cost countries, such as India, to cope with the higher costs imposed by the Budget, according to James Reed, chief executive of major recruiter Reed.
Mr Reed said companies were seeking to move jobs overseas to cope with the “triple whammy” of changes to National Insurance, an increase in minimum wage and the introduction of stronger union and workers’ rights. Government analysis has suggested the new workers’ rights will cost companies almost £5bn a year.
Neil Carberry, the chief executive of the Recruitment and Employment Confederation, said that he was also having conversations with bosses about moving jobs out of Britain in the wake of the Budget.
He said: “I have talked to many larger firms where the question has been about offshoring.”
Preparations to offshore jobs will add to growing concerns about the Budget’s impact on the economy. While the Chancellor has insisted her number one priority is growth, bosses and economists have warned that the Budget will harm investment, job creation and wage growth – whilst fuelling inflation.