Retailers across the UK are warning of further UK retail job cuts as industry confidence hits a five-year low, driven by recent tax increases and weakening consumer sentiment.
A new report by the Confederation of British Industry (CBI) reveals businesses are now preparing to hike prices, trim their workforce, and scale back investment at an alarming pace.
Retailers brace for deeper cuts following tax rises and weak consumer sentiment
The CBI’s latest quarterly survey shows employment in retail dropped in the year to May and is predicted to decline more steeply in the coming month. Retailers are grappling with higher costs triggered by a hike in National Insurance contributions and the increase in the National Living Wage introduced in April.
According to the CBI, sentiment in the retail sector has plunged at the fastest rate since the Covid-19 pandemic. A net balance of -29% of firms expect business conditions to worsen in the next three months, compared with -19% in February.
Additionally:
- 57% of retailers anticipate accelerating price rises in June
- 20% expect to cut jobs next month
- 47% plan to reduce investment over the next year
Ben Jones, lead economist at the CBI, commented: “This was a fairly downbeat survey and highlights some of the challenges facing the retail and wider distribution sector.”
He further noted: “Firms are feeling the impact of higher Nics and the national living wage increase. In contrast to other recent retail data, this survey suggests parts of the sector are still struggling with fragile consumer demand, though online sales seem to be holding up better.”
The rising cost of doing business is forcing companies to reconsider their strategies. The UK retail job cuts forecast is among the most severe since the pandemic. Companies are turning to price hikes and job reductions to manage costs.
This trend coincides with historically low consumer confidence, which saw record lows in April. High inflation, interest rate pressures, and stagnant wage growth are contributing to cautious consumer spending, adding to retailers’ woes.
Retailers are now:
- Reassessing staffing needs
- Postponing or cancelling investment plans
- Increasing shelf prices to manage margins
- Leaning more on online channels to stabilise sales
Although some online segments are performing better, brick-and-mortar outlets are under increasing pressure, particularly smaller and independent retailers.
The CBI’s findings paint a sobering picture of the state of UK retail. The UK retail job cuts signal deeper structural challenges in the sector, made worse by tax hikes and tepid consumer demand. While some areas like online sales provide a glimmer of hope, the overall sentiment remains bleak.
Unless business costs are curbed or consumer confidence rebounds, more job losses and price increases are expected, adding fresh strain on both retailers and shoppers across the country.
