The British Retail Consortium (BRC) has criticised the chancellor's Budget, warning that retailers face rising costs despite measures designed to support smaller high street businesses.

Helen Dickinson, chief executive of the BRC, said the Budget failed to deliver the “breathing space” retailers had been promised, arguing that higher employment costs and business rates would continue to weigh on the sector.

“Today's Budget will see retail costs keep climbing as the Chancellor failed to provide the breathing space he promised,” she said on Wednesday. “Retail faces £41 billion in business taxes this year, over 120,000 jobs have been lost in just two years, and one in seven shops lies empty.”

The comments come after the Chancellor announced that the legal minimum wage will rise by 3.9 per cent from April. The government also increased the business rates threshold for high street premises in England from £12,000 to £18,000, removing around 70,000 smaller retail, hospitality and leisure properties from paying business rates.

However, Dickinson argued that the changes would do little for most retailers.

She described the business rates announcement as “smoke and mirrors”, noting that rates will still rise by 3.5 per cent next April, adding around £250 million to retailers' bills.

“While we welcome the decision to remove 70,000 small high street businesses from paying business rates altogether, the overwhelming proportion of employment and rates come from the 500,000 medium and larger retail outlets whose bills will go up once again,” she said.

The BRC also warned that the increase in the National Living Wage, combined with no reduction in employer National Insurance Contributions, would add further pressure to retailers already facing higher employment costs.

According to Dickinson, the latest measures add another £2 billion to the £6.5 billion increase in employment costs retailers have faced over the past two years.

The Budget also introduced a scheme that will cut electricity bills by 25 per cent for 10,000 energy-intensive businesses. However, Dickinson said retailers remained excluded despite facing electricity cost increases of around £440 million this year.

She added that the government should have extended the British Industrial Competitiveness Scheme to retail and its supply chain.

Online marketplaces

The government also announced that online marketplaces such as Amazon, eBay and Temu will become responsible for collecting VAT owed by third-party sellers from October 2027.

Kristaps Zips, UK chief executive at payment technology firm payabl., welcomed the move, saying it would help create a fairer competitive environment.

“Healey's decision to make online marketplaces liable for VAT collection on behalf of sellers from October 2027, using that money to cut business rates on the high street, is a welcome step towards a fairer playing field,” he said.

“Compliant businesses shouldn't lose out to those not paying the VAT they owe and the new rules must be simple for the many small merchants who sell both online and in-store.”


Industry reaction to the wider package was mixed. Catherine Frame, director of retail solutions at technology firm UiPath, welcomed the increase in the business rates threshold.

“Taking 70,000 retail, hospitality and leisure businesses out of business rates altogether gives them breathing room at a time when margins are tight,” she said. “The next step is helping them make every pound count, and accessible automation can take on the admin and back-office work so small teams can focus on customers and keeping their doors open.”

Moji Oshisanya, chief commercial officer at shopping website VoucherCodes.co.uk, said the measures would benefit smaller retailers but warned that wider cost pressures remain.

“Relief for small shops is welcome,” she said. “Taking 70,000 businesses out of business rates will help independent retailers heading into their busiest season. But retailers still face higher wage bills as wages rise, and shoppers are cautious. The retailers who do well this Christmas will be the ones who compete on value, wherever people choose to shop.”

Melissa Minkow, global director of retail strategy and insights at software company CI&T, said the success of the Budget would ultimately depend on whether consumers notice the benefits.

“The real test of this Budget is not whether retailers can calculate the bottom line, but whether British consumers can recognise it,” she said. “To be best positioned for that outcome retailers need to think of both technology and talent as investment to provide the most value.”

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