Healey urged to cut business costs as consumer confidence slips

Retailers have called on John Healey to slash the “burdensome” costs of doing business at the Budget next month, warning that consumer confidence will continue to stumble without urgent action. 

The British Retail Consortium (BRC), which represents top retailers like Tesco, Sainsbury’s and Marks and Spencer, has urged the Chancellor to tackle the “triple blow” of soaring business rates, employment costs and energy bills. 

Consumer confidence fell for the first time in four months in September, according to new figures from the BRC and Opinium, indicating that fresh fears over inflation and government debt are weighing on Brits’ wallets. 

Nearly half of Brits now expect the state of the economy to worsen in the next three months, compared to 44 per cent in August. Almost a third of consumers expect their personal financial situation to worsen in the near-term, up from 28 per cent last month, as households prepare to cut back on discretionary spending.

Some 13 per cent of consumers expect to spend less on clothes in the near future, up from 11 per cent last month, while the number of Brits preparing to cut back on electronics jumped from 11 to 12 per cent, the survey found.

“[Consumers] want to see the government prioritise bringing down the cost of living” at Healey’s first budget next month, said Helen Dickinson, chief executive of the BRC.

“Retail will play its part, but the Chancellor must not compound the triple blow from escalating employment costs, energy bills, and business rates, allowing retailers to focus on holding prices down,” she added.

“He should start by freezing the business rates multiplier, preventing yet another burdensome tax increase.”

Retailers have sounded the alarm in recent weeks that the government could hike business rates bills for large shops and warehouses in a bid to cut taxes for smaller high street firms.

Retail bosses have warned that any tax raid on large shops would have a devastating knock-on effect on the British high streets which Burnham has pledged to save. 

Private sector growth in the UK economy slowed to a three-month low in September, in another warning that business confidence is waning while costs mount. 

The closely-watched S&P Global PMI index, which reflects the health of the UK’s manufacturing and services sectors, slipped from 52.5 in August to 51.7 last month. 

Chris Williamson, S&P’s chief business economist, said this data suggests growth in the wider economy is running at a “mere” 0.1 per cent rate of growth each quarter.

“September is seeing a worrying combination of disappointingly sluggish economic growth and intensifying inflationary pressures, with subdued business confidence and high costs meanwhile continuing to discourage hiring,” he said.

The manufacturing sector has ground to its slowest rate of growth since April, according to S&P, while service firms said “subdued domestic economic conditions and ongoing geopolitical uncertainty” are choking growth.

“Growth, business confidence and employment are all being hamstrung by high energy prices, elevated business costs, geopolitical worries, higher market borrowing costs and uncertainty over Government policy at home in the run-up to the autumn Budget,” Williamson added.