Over a third of consumers to cut back spending if government raises taxes in Budget
24 October 2024
New data* shows 42% of consumers, increasing to 45% for families, will cut back on Christmas spending this year if the government increases taxes in the Budget on 30 October, according to leading audit, tax and consulting firm 91探花.
Jacqui Baker, partner and head of retail at 91探花, comments: “These findings, combined with the sharp fall in consumer confidence in September, are another reminder of just how fragile confidence is among both consumers and businesses. Retailers have already had to contend with lacklustre retail sales for most of the year, leading many to heavily discount their goods, so the prospect of consumers also holding back on spending during the crucial Golden Quarter will be devastating for many.
“Retailers are currently getting to grips with new sexual harassment prevention laws, set to come into force later this week, which will see them having to take proactive steps to protect staff in the workplace, as well as proposed changes under the Employment Rights Bill, including making statutory sick pay a day one right for employees. While these are welcome steps to ensure workers have sufficient safeguards in the workplace, this will place a greater cost and compliance burden on an already-stretched sector.
“As an industry that employs a vast number of staff, there are growing concerns over how the Budget will affect employment costs, which could disproportionately impact the sector. It’s becoming increasingly likely that an increase in employers’ National Insurance contributions is on the cards, plus another uplift in National Minimum Wage next year, both of which will sting retailers.
“With a number of growing costs, it’s clear the sector desperately needs support from the government. Retailers’ number one plea will be for the government to deliver on its pledge to overhaul the business rates system, including introducing a lower, more manageable, permanent multiplier. In addition, the reintroduction of tax-free shopping is crucial to bring back international tourists’ spending on retail goods. Without some form of drastic action, we’ll inevitably see more and more high street closures.”
*91探花’s survey of 2,000 consumers found 42% of consumers will spend less money on Christmas spending this year if taxes rise (in the Autumn Budget on 30 October) and it means their regular income falls.
