**Retail Giants Sound Alarm on Reeves Budget**
A recent survey conducted among Chief Financial Officers (CFOs) of 52 major retailers has unveiled a stark outlook for the industry in the coming year. The sentiment among these financial leaders was notably pessimistic, with concerns looming over trading conditions and potential consequences for businesses, employees, and consumers alike.
**Industry Concerns Unveiled**
According to the survey results, a staggering 70% of CFOs expressed pessimism about trading conditions over the next 12 months. This sentiment is reflected in the top concerns highlighted by these financial decision-makers, with falling demand for goods and services, inflation, and increasing tax and regulatory burdens at the forefront of their worries.
In response to the impending increases in employers’ National Insurance Contributions (NICs) set to take effect from April 2025, a significant portion of CFOs indicated their plans to raise prices, reduce hours and overtime, downsize headcounts, and implement automation to offset rising costs.
**Implications of the Budget**
The impact of the Budget on wider business investment was also a notable point of concern, with 46% of CFOs planning to reduce capital expenditure and 25% delaying new store openings. Additionally, 44% of respondents anticipated reduced profits, further limiting opportunities for investment in the sector.
It is essential to note that these findings come on the heels of a letter signed by 81 retail CEOs addressed to the Chancellor, outlining their apprehensions regarding the economic repercussions of the Budget. The letter emphasized potential cost escalations within the retail industry due to changes in employers’ NICs, National Living Wage increases, and reformed packaging levies.
**Future Projections and Challenges**
Looking ahead, CFOs offered their forecasts for the year, predicting a rise in shop price inflation, particularly in the food sector. Sales growth is expected to marginally improve from previous levels but may still fall short of inflation rates, signaling a potential decline in sales volumes amidst mounting costs.
Helen Dickinson, Chief Executive at the British Retail Consortium (BRC), emphasized the challenges facing the industry, highlighting the significant impact of the Budget on retailers, employees, and consumers. Dickinson underscored the need for government intervention to support retail investment and confidence, particularly in addressing business rates that pose a substantial obstacle to growth and job creation within the sector.
As the retail landscape braces for economic shifts and operational challenges, stakeholders across the industry are navigating tough decisions to sustain business viability while safeguarding the interests of employees and consumers alike. The evolving dynamics underscore the critical need for collaborative efforts to navigate the turbulent terrain ahead and foster resilience within the retail sector.
