Happy New Year to all of you from all of us.
Currently, 2025 seems to be fairly similar to 2024. Poor weather, Elon Musk saying outlandish things, Luke Littler throwing darts very well (especially for one not allowed into a pub on his own), the PM and Man Utd manager under pressure…
.. and tough trading on the High Street as the country’s largest retailers are warning they could be forced to cut thousands of jobs this year as the industry braces for higher taxes and employment costs after a bleak Christmas shopping season.
Figures from the British Retail Consortium (BRC) show sales growth over the “golden quarter” between October and December came close to flatlining. For the three months to December – when many retailers make the bulk of their annual profits – the BRC said total UK retail sales growth was 0.4% year on year as shoppers prioritised spending on food and drink over the festive season. Once inflation was factored in, retail sales by volume slid over the year.
Separate figures from Barclays show zero growth in consumer card spending in December, as households cut back on essential items and pub and restaurant meals in favour of spending on experiences.
For 2024 overall, total sales increased by 0.7% from 2023, highlighting a cautious approach to consumer spending as households continue to deal with the effects of the post-Covid and cost of living environment.
Helen Dickinson, the chief executive of the BRC, said retailers were poised for a challenging year as they faced £7bn of additional costs from tax increases and new regulations planned by the government.
In news of a similar vibe, The British Chambers of Commerce (BCC) said its survey of nearly 5,000 firms suggested confidence had "slumped", falling to its lowest level for two years. More than half of companies are planning to raise prices in the next three months as they face a "pressure cooker of rising costs and taxes", whilst almost two-thirds told the BCC they were worried about taxes following the Budget, which announced a rise in national insurance contributions (NICs) paid by firms from April.
The BCC's survey which was conducted after the Budget, found that 55% of firms expected to raise their prices in the next three months, up from the previous reading of 39%.
Shevaun Haviland, the BCC's director general, told the BBC that in the face of higher costs "there's only so many things you can do. You've got to think about putting up prices... or you've got to take that hit in your margin, which means you have less money to invest in the future, or you've got to look at your recruitment and staff costs.” And to really hammer the point home, she finished “So it's really, really tough."
Pressure is mounting on Keir Starmer’s government amid signs of a worsening slowdown in the British economy, with growth on track to have flatlined for the entire second half of 2024.
Business leaders have warned that measures in Labour’s budget to increase employer national insurance contributions by £25bn from April and a 6.7% rise in the national minimum wage will force companies to cut jobs or pass on the higher employment costs in the form of higher prices. Retailers including Tesco, Marks & Spencer and Next wrote to Rachel Reeves in November to warn that a £7bn increase in annual costs after the budget would lead to job cuts and higher prices.
Clive Black, a retail industry analyst, said he had doubled his forecast for food inflation to 3% for 2025 from 1.5%, claiming it was “UK government policy that is now the prime source of grocery price appreciation”.
Dickinson (BRC chief executive) said the government needed to take steps to ease the pressure on struggling retailers, or risk widespread job losses.
“With little hope of covering these costs through higher sales, retailers will likely push up prices and cut investment in stores and jobs, harming our high streets and the communities that rely on them,” she said.
A report by the Chartered Institute of Procurement and Supply (CIPS) has warned the price of household staples including food and drink could climb by as much as 20% in 2025 if challenges with sourcing and transporting goods continue. The cost of electronics, machinery, chemicals and petroleum products could also rise, said the industry body, as a result of geopolitical instability, including tensions in the Middle East, supply chain disruption and cybersecurity issues.
International shipping costs have been rising in recent months as global freight companies faced a string of challenges in moving goods around the world. As we have reported last year, tensions in the Middle East and attacks on vessels travelling through the Red Sea by Houthi rebels prompted many major shipping firms to re-route their vessels around the Cape of Good Hope, adding cost and time to journeys.
In addition, tens of thousands of port workers on the east coast of the US are threatening to reprise their industrial action, following last October’s strike, after they reopened contract negotiations with their employers.
Ben Farrell, the chief executive of CIPS, said: “What is clear from our research is that there are a number of strategic challenges that are likely to disrupt the smooth flow of goods and services … These will present particular challenges for consumers, who are likely to be disproportionately impacted unless these issues are managed effectively.”
And into this world scene is about to step a man who declared his favourite word to be tariff…
