Britain’s biggest retailers have written to finance minister Rachel Reeves to say that further tax increases in her upcoming budget could undermine the government’s manifesto pledge to improve living standards.

The letter, published on Thursday, was coordinated by the British Retail Consortium trade body and signed by 60 retail bosses, including those at John Lewis, Tesco, Sainsbury’s, Asda, Morrisons, Aldi, Lidl, JD Sports, Boots, Currys, and Kingfisher.

“Labour’s (2024) manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk,” the letter said. It said the retail industry was determined to help the government deliver its growth ambitions.

“However, for this to be possible, the conditions for stable prices, continued investment and sustainable employment must be at the heart of this year’s Budget.” Retailers are particularly concerned that Reeves’s plans to reform business rates, or commercial property taxes, will increase the amount paid by those with the largest stores.

Reeves needs to ensure “that no shop – large or small – pays more than it presently does”, BRC CEO Helen Dickinson said.
Reeves is likely to raise taxes or cut spending in her budget – probably by more than 20 billion pounds ($27 billion) according to analysts – to remain on track to meet her fiscal rules and avoid unsettling investors. Her first budget last year raised employers’ National Insurance, or social security, contributions and lowered the threshold for when firms start paying. It also hiked the minimum wage.

When a new packaging tax is also taken into account, the retail industry says it has faced a rise of 7 billion pounds in annual costs, driving up prices. The BRC has already warned that food inflation will be as high as 6% by the end of the year, driving up household bills just as winter energy costs start to kick in. Official data published on Wednesday showed British inflation hit 3.8% in July, its highest in 18 months.