Tesco, Asda and Sainsbury's warn job cuts and higher prices are 'inevitable' after £25bn national insurance hike

19 November 2024, 10:44

Some of the UK's biggest retailers have said price hikes and job cuts are 'inevitable' following Chancellor Rachel Reeve's national insurance hike.

More than seventy businesses such as Asda, Tesco and Sainsbury's have written an open letter in response to the upcoming £25 billion rise in employers' national insurance contributions.

Whilst the rate has been increased, the threshold at which businesses need to pay has been slashed, as ministers insist it is the only way possible to bolster public services.

However, the OBR projected that the fiscal packages would boost inflation and unemployment.

In the letter today, the companies cautioned that the huge tax increase, alongside packaging levies and increase to the national minimum wage could cost retailers over £7billion a year.

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The letter said: "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."

The bosses of Aldi, Amazon UK, Boots, Lidl, JD Sports, Primark, Morrisons and Greggs

The group said they would 'welcome' the chance to meet with Ms Reeves and and suggested changes like phasing the reduction in the NICs lower earnings threshold, delaying timelines for packing levy implementations and revisiting business rates proposals stated in the budget.

The letter read: "By adjusting the timings of some of these changes, the Government would give businesses time to adjust and greatly mitigate their harmful effects on high streets and consumers."

It follows another joint letter organised by UK Hospitality earlier this month which raised fears that minimum wage jobs might become 'unviable' due to the NICs overhaul.

Keir Starmer has come to the defence of the budget's 'tough' fiscal decisions following rising criticism from businesses and Farmers' Union protests regarding chances to inheritance tax.

He said: "Make no mistake, I will defend our decisions in the Budget all day long.

"I will defend facing up to the harsh light of fiscal reality.

"I will defend the tough decisions that would be necessary to stabilise our economy and I will defend protecting the pay slips of working people, fixing the foundations of our economy and investing in the future of Britain and the future of Wales, finally turning the page on austerity once and for all."