Businesses are sounding the alarm over higher prices
Supermarkets, pubs, and other businesses are issuing stark warnings that Brits could face higher prices after one big change by the government. The Chancellor, Rachel Reeves, has announced an increase in the rate of employer’s national insurance contributions in the latest Autumn Budget, prompting concerns from some about a potential rise in the cost of living.
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The term “cost of living” describes the amount of money required to maintain a certain standard of living. Naturally, this figure tends to steadily increase, but when it surges, as it has since 2021, it can spark a cost of living “crisis”. This forces individuals to make difficult financial choices over what used to be reasonably affordable essentials like groceries or home goods.
Business leaders are sounding the alarm bell that the uptick in taxes this year will inevitably escalate consumer prices. Simon Roberts, the CEO of Sainsbury’s, thinks that the Budget could saddle the supermarket with an additional £140 million in costs annually. He said: “This barrage of costs coming at us is significant and we’re an industry, a very efficient industry and intensely competitive, and there just isn’t capacity to absorb all of this.”
Pubs giant JD Wetherspoon predicts the Autumn Budget could inflate their expenses by £60m, while Marks & Spencer estimates a £120m blow. Stuart Machin, M&S’s Chief Executive, said: “I want to keep focused on fantastic product and value and minimise the impact on customers.”
Businesses might take the financial blow in different ways, rather than just hiking prices. They may take on lower profits, cut costs or potentially reduce staff numbers and their wages as time goes on.
The Chancellor Rachel Reeves acknowledged the tough decision to impose more tax on businesses was not taken lightly. However, she insisted it was the “right choice” to secure funds needed for public services like education and the NHS.
Alongside this, UK firms must prepare for additional expenses including a higher minimum wage, increased business rates, and the implementation of stronger workers’ rights regulations.
Trade body UKHospitality estimates the hospitality sector could see price spikes of about 6%. CEO Kate Nicholls commented: “The increase to employer NICs and, crucially, the lowering of the threshold left hospitality owners with a sleepless night as they came to terms with the enormous cost they will have to bear from April onwards. The new cost of employing core members of staff is eye watering an increase of at least £2,500 is far, far beyond what anyone’s worst-case scenario was.”
“Hospitality is at the heart of our communities but the enormous value it delivers both socially and economically is under threat.”
Have your say! Are you worried that the cost of living will rise again? Comment below, and join in on the conversation.
