Retailers demand business rate freeze as consumer confidence falls

The British Retail Consortium has urged Chancellor John Healey to reduce the costs of doing business ahead of next month’s Budget. The trade body, which represents major high street names including Tesco, Sainsbury’s and Marks and Spencer, warned that consumer confidence will continue to decline without immediate government intervention. Retailers are specifically calling for action against what they describe as a triple blow from rising business rates, employment costs and energy bills.

New data from the BRC and Opinium indicates that consumer sentiment deteriorated in September, marking the first drop in four months. This shift suggests that growing concerns over inflation and public debt are impacting household spending. Nearly half of British consumers now anticipate that the economic outlook will worsen over the next three months, a rise from 44 per cent in August. Furthermore, almost a third of shoppers expect their personal financial position to decline in the near term, up from 28 per cent the previous month, as they prepare to reduce discretionary expenditure.

Specific spending cuts are already evident in the survey results. Thirteen per cent of consumers plan to spend less on clothing, an increase from 11 per cent last month, while the proportion intending to cut back on electronics rose from 11 to 12 per cent. Helen Dickinson, chief executive of the BRC, stated that consumers want the government to prioritise lowering the cost of living. She argued that while the retail sector will do its part, the Chancellor must avoid exacerbating the pressure from escalating operational costs. Dickinson specifically recommended freezing the business rates multiplier to prevent another tax increase, allowing retailers to focus on keeping prices stable.

This call for relief comes as retailers have expressed alarm over potential government plans to increase business rates for large shops and warehouses to offset tax cuts for smaller firms. Industry leaders have warned that such a move would have a severe negative impact on the high street. The broader economic backdrop remains challenging, with private sector growth slowing to a three-month low in September. The S&P Global PMI index, which tracks manufacturing and services, fell from 52.5 in August to 51.7 in September.

Chris Williamson, chief business economist at S&P, noted that this data implies the wider economy is growing at a mere 0.1 per cent per quarter. He described the current situation as a worrying combination of sluggish growth and intensifying inflationary pressures. Williamson added that subdued business confidence and high costs are discouraging hiring, with the manufacturing sector experiencing its slowest growth since April. He concluded that growth, confidence and employment are all being hindered by high energy prices, elevated business costs, geopolitical uncertainty and higher borrowing costs in the run-up to the autumn Budget.