Raising business rates and national insurance will hit retail hardest.

The British Retail Consortium has demanded that reigning in public spending must take priority over tax rises in next month’s budget.

BRC says that any increase in the tax burden risks tipping the economy back into recession.


“The key challenge for the Government in the Budget is to outline a credible plan for addressing the fiscal deficit without precipitating a ‘double dip’ recession. A significant focus must be on driving efficiency and productivity in the public sector. There is a need to review all options, including ceasing areas of activity and de-commissioning services that Government can ill afford to continue,” the organisation said in a strongly worded statement.

Stephen Robertson, British Retail Consortium director general, added: "The size of the country’s deficit means action must be taken. To nurture our fledgling recovery, the main tool for dealing with the deficit has to be cutting non-vital public sector spending.

Robertson concedes that some tax rises are inevitable, but warns that if the burden of taxation is too great, customers’ ability to spend would be wrecked – risking a double dip recession.

In a wide-ranging review of options that might be considered in the next budget, the BRC demanded that the government does not make it more expensive to hire and retain employees.

Specifically, it must understand the implication of an increase in national insurance. A one percent rise will cost retailers an extra £220 million. “This equates to almost 15,000 employees on an average retail wage,” the statement says. It calls for the one percent increase planned for 2011 to be scrapped, and for this year’s national minimum wage increase to be no higher than one percent.

Business rate rises will hit retailers harder than any other sector. The industry pays £23 billion, one quarter of all rates across the country, leading the BRC to demand “affordable increases to business rates” this year.