Tesco echoed these sentiments, projecting an additional £200 million in costs from the National Insurance rate hike alone.
National Insurance Hike and Broader Economic Pressures
The British government’s October 2024 budget introduced a £40 billion ($49 billion) fiscal package that includes raising the employers’ National Insurance rate from 13.8% to 15%, effective April 2025. The change is expected to generate £25.7 billion annually by the decade’s end, according to HM Treasury.
The tax hike comes amid broader inflationary pressures that have already strained the retail sector. The British Retail Consortium (BRC) warned on Thursday that inflation eroded much of the sector’s 2024 sales growth and predicted a decline in sales for 2025. Retailers may face difficult decisions, including cutting investments and jobs, to offset rising costs.
Industry-Wide Concerns
“Inflation and tax changes are a double hit for the retail industry, leaving many companies with no choice but to make tough cuts,” said a spokesperson for the BRC.
