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The British Retail Consortium (BRC) has warned that fragile economic growth and rising unemployment pose a significant threat to the retail industry, following the chancellor’s Spring Statement yesterday (3 March). Its warning comes as unemployment has climbed to 5.2% and is expected to increase further.
The industry body found that employment costs for retailers increased by more than £5bn during the previous year.
Chancellor Rachel Reeves yesterday (3 March) confirmed the Office for Budget Responsibility (OBR) downgraded UK economic growth for this year to 1.1%.
She said that “average growth across the forecast period is largely unchanged”, adding the OBR has adjusted the profile of Gross Domestic Product (GDP) “so that it grows slightly slower in 2026, and faster in 2027 and 2028″.
The OBR previously forecast the UK economy to grow by 1.3% in 2026, but it is now 1.1%.
It expects economic growth to pick up in 2027 and 2028 to 1.6%, and then 1.5% in 2029 and 2030.
The OBR has also increased its forecast for unemployment, now expecting it to peak at 5.3% this year before it falls gradually to 4.1% by 2030.
Unemployment reached a five-year high of 5.2% in the three months to December, the latest figures show.
Helen Dickinson, CEO at the British Retail Consortium, said: “Today’s figures underline the scale of the economic challenge: growth is fragile, unemployment has climbed to 5.2% and is expected to rise, and businesses are cutting back. While household finances may improve later in the Parliament, the immediate risk is to jobs, especially in retail. At a time when job vacancies are falling and confidence is weak, the priority should be protecting employment and strengthening living standards.
“Instead, retailers face a cost of doing business crisis. Employment costs rose by more than £5bn last year, and poorly implemented reforms in the Employment Rights Act risk adding further cost and complexity at the worst possible moment. Reforms must raise standards without deterring hiring.”
She added: “The chancellor spoke about boosting investment in communities. Our high streets are the backbone of local economies, yet business rates continue to undermine their viability. While Government has taken some steps to fix the current system, it is broken and must be overhauled entirely to reduce the burden on the high street once and for all.
“Retail has unparalleled reach across the country, and stands ready to work with the Government to ‘spread’ and ‘unlock’ opportunity in every part of Britain. But to do so, Government must get a grip on the cost of doing business so retailers can invest confidently in people, places and prices.”
