After many of the details were released early by the OBR, Chancellor Rachel Reeves delivered the 2025 Budget today, outlining significant changes to taxation and Government policy – and associations and institutions from the retail, manufacturing and property sectors were quick to respond.
The British Retail Confederation (BRC) was clear in its demands ahead of the announcement, calling for a significant reduction in business rates for retail premises, and a policy by which "no shop pays more".
Responding to today's announcements, chief executive Helen Dickinson says: “It was a mixed bag Budget that offered relief for many shops, but brought in new costs for others. Retailers face a delicate balancing act as they strive to invest, hire, and keep prices affordable. The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.
"The welcome plan to scrap the damaging de minimis loophole was weakened by a 2029 deadline. And while increases in the National Living Wage were in line with expectations, the rise to the minimum wage for under-21s could limit employment opportunities. All in all, we will see winners and losers across retail and the impact for consumers will unfold in the coming months, but this Budget does not go far enough to mitigate the inflationary pressures already bearing down on the industry.”
On business rates, she elaborates: “This Budget offered much-needed relief for some retailers, but fell short of the bold action needed to secure the long-term future of our high streets and mitigate the inflationary pressures which are currently pushing up prices for households. While the announced changes to business rates are a step in the right direction, many felt the Chancellor should have gone further.
"The 5p rates reduction for retail, hospitality and leisure properties with a rateable value below £500,000 is unlikely to fully fix the situation where retail, as 5% of the economy pays over 20% of all business rates. Including supermarkets and anchor stores in the new surtax is a retrograde step that does little to mitigate the rising cost of food and essentials. Larger stores, which already pay one third of the industry’s business rates bill and employ around a million people, should have been exempted from a surtax intended to fund support for the high street.”
On employer NI and the National Living Wage, she says: “Retail employment costs have risen significantly over the last year, with last year’s Budget changes to employer National Insurance and the National Minimum Wage adding £5b to retail costs. With food inflation nearing 5% and 100,000 jobs lost in retail over the last year, further cost rises are challenging for retailers to absorb, given tight retail margins. But the NLW uplift announced by the Chancellor was in line with the core expectations announced by the Low Pay Commission, providing stability for retailers’ financial planning.
“The higher increases for under-21s, when coupled with concerns of retailers about the implications of some provisions in the Employment Rights Bill, will do little to encourage the employment prospects of younger people.”
On salary sacrifice – limiting the amount people can sacrifice from their salary to avoid paying NI on pension contributions to £2,000 a year from 2029 she notes: “Changes to salary sacrifice will hurt retail employees and businesses alike. For many retail colleagues, this will act as a brake on their pension savings. For retailers, these changes will cost hundreds of millions, punishing those businesses with strong pension offerings, and/or forcing them to reduce the contributions they make to their employees’ retirement security.”
On low-value imports, she says: “While we welcome the decision by the Chancellor to close the de minimis loophole, the proposed timeframe is simply too long. There are 1.6 million parcels arriving in the UK every day, double what they were last year, and businesses cannot afford any delay on scrapping the existing rules. The US has already removed its threshold, with the EU following suit next year – the Chancellor must take decisive action and remove the exemption as fast as possible. This will help protect British consumers from the risks of imported goods that don’t meet the UK’s stringent environmental and ethical standards, while promoting fairer competition.”
On the Budget's likely impact on retail staffing and workers' wellbeing, Chris Brook-Carter, chief executive of the Retail Trust, says: “It remains to be seen whether today’s Budget will do enough to reassure the UK retail industry days ahead of the busiest shopping period of the year and amidst the ongoing uncertainty currently facing the sector from all sides.
“Retail businesses are still reeling from the huge economic pressures placed on them in the last Budget and have been dealing with a fall in sales in October due to dampened consumer confidence as shoppers awaited today’s Budget. Our latest research has found 54% of retail workers are at risk of leaving their jobs and 44% are working while unwell due to the insecurity they and their employers face. Meanwhile 77% have told us they have experienced physical or verbal abuse this year, with 43% now coming under attack every week.
“Retail is the largest employer outside of the public sector, is a gateway to work for many people, and binds our communities and high streets together. This is something we forget at our peril, and our concern is that job insecurity among employees could rise and that shoppers’ tensions will remain heightened over the coming months. The industry needs more support from the Government but it’s also on all of us to support staff and help bring respect back to the high street this Christmas when we’re out shopping, starting with acts as simple but as important as a greeting, a thank you and a smile.”
On its effects on independent retail, Charlotte Broadbent, UK GM at wholesaler Faire, says: "Many independent shops rely on a strong Christmas shopping period to help them survive the forthcoming year but ongoing uncertainty in the run-up to today’s Budget has meant that shoppers have been naturally holding back on spending ahead of what is supposed to be the busiest time of year for small retail businesses.
"Independent shopkeepers are extremely creative and resilient, and I know they have been working even harder over the last few months to source unique and innovative products that put smiles on their customers’ faces and encourage them into stores.
"The Chancellor announced today that she intends to boost productivity, cut the cost of living and bring down inflation, and we only hope that this can go some way to reassuring shoppers and retail businesses in this important, final month before Christmas. We of course welcome the changes to business rates that should make it fairer for those running independent shops on our high streets, and Rachel Reeves has also pledged to make the UK a more attractive place to grow small businesses which is something we, as a champion of all the small businesses working with us at Faire, would be extremely supportive of.”
On the likely impact of the new 'mansion tax' on property movement, Jonathan Handford, MD at national estate agent Fine & Country, comments: “The introduction of this new variety of mansion tax raises far more questions than answers at this stage, and the practicalities could prove far more challenging than the headline suggests.
“Many of the properties that fall into this bracket haven’t been sold in decades, so establishing an accurate and up-to-date valuation is a logistical mountain to climb. To avoid confusion, the Government will need to set out clearly how these assessments will be carried out and how any disputes will be handled.
“One of the big unknowns is how homeowners might respond. There will undoubtedly be conversations about whether properties could be restructured, and we may well see a rise in splitting titles to bring them under the threshold.
“A savvy owner with a single home worth £2m splitting the title to become two homes worth £1m each is not as far-fetched as it sounds, especially if the incentive to reduce liability is strong enough. Until the full details are published, it’s impossible to know what loopholes will be allowed.
“In the short term, we’re not expecting an immediate rush of sellers trying to beat the deadline. Most owners of higher-value homes play the long game with their assets, and without clarity on how the tax will be calculated or enforced, it’s difficult for anyone to make a decisive move.
“If implemented carefully, it may have a limited effect on day-to-day market activity. However, if the system proves complicated, unclear or punitive, it risks undermining confidence at the prime end of the market. We will be watching closely as the finer points emerge in the days and weeks to come.”
Varun Deo, the co-founder of B2B furniture manufacturing and wholesale partner Trampoline, says: "With NI contributions expected to increase and import compliance becoming more stringent, UK furniture retailers face a structurally higher cost base. For a sector so dependent on global sourcing and skilled labour, these changes tighten margins across the board. In this environment, there is a real premium on supply-chain discipline, transparency and scale."
Furniture News will update this story with further reactions as they emerge. Find the Budget details in full here.
