Retailers are concerned that government tax policy could drive up inflation and job losses, according to a new survey of chief financial officers (CFOs) and finance directors in the sector by the British Retail Consortium (BRC).

According to the figures released by the trade association, 56 per cent of CFOs in the industry are “pessimistic” about potential tax rises and trading conditions over the next 12 months. Just 11 per cent described their feelings as optimistic.

The survey, which represented around 9,000 stores, found that almost 90 per cent of CFOs listed “tax and regulatory burden” in their top three financial concerns, which includes 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 the BRC said 62 per cent of CFOs listed it in their top three concerns.

When asked about the consequences of the last Budget, which saw increases to employer National Insurance and National Living Wage, 85 per cent of CFOs told the BRC their businesses had been forced to raise prices, with two-thirds predicting further rises in the coming year.

The survey suggests that jobs could also be at risk, with 42 per cent of CFOs telling the organisation they had frozen recruitment, while 38 per cent said they had reduced job numbers in-store.

The BRC said this is backed up by official job figures, with almost 100,000 fewer retail jobs in the first quarter of 2025 compared to the previous year.

Data released last month from the Office of National Statistics (ONS) showed the number of UK retail jobs had fallen by 364,000 over the past 10 years and there were a total of 2.76 million jobs as of March 2025, around 93,000 fewer than the same month of the previous year, and 364,000 less than in 2015.

Commenting on the June figures, the BRC warned that as many as 160,000 part-time retail roles - more than one-in-10 - are currently at risk from being lost in the next three years.

The BRC also found investment in local communities has also suffered as 38 per cent of CFOs suggested they have reduced investment, while one in six have already delayed opening new stores.

Rising prices

Given inflation has been rising steadily over recent months, with food inflation now at four per cent according to the BRC-NielsenIQ Shop Price Monitor, the BRC said it now predicts food inflation will be up to six per cent by the end of the year and could pose “significant challenges” to household budgets, particularly in the run up to Christmas.

Earlier this month, it was revealed that consumer price inflation increased unexpectedly to 3.6 per cent in June, up from 3.4 per cent in the previous month.

Food inflation figures also rose from 4.4 per cent in May to 4.5 per cent over the four-week period.

Some of Britain's biggest supermarkets and West End retailers are facing a £600 million surge in property taxes next year as Government reforms to business rates take effect from April 2026.

The new system will disproportionately impact larger stores with valuations above £500,000, according to analysis by property agents Colliers in a report for The Times.

Helen Dickinson, chief executive at the BRC, pointed out that retail accounts for five per cent of the economy yet currently pays 7.4 per cent of business taxes and a “whopping” 21 per cent of all business rates.

She said it is vital that the upcoming reforms offer a meaningful reduction in retailers’ rates bill, and ensures no store pays more as a result of the changes otherwise the British public will suffer from the knock-on impact on inflation.

“Retail was squarely in the firing line of the last Budget, with the industry hit by £7 billion in new costs and taxes and 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,” she added. “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.”

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