UK Spring Forecast raises retail sector concerns, says BRC

The UK Spring Forecast has highlighted a fragile economic outlook and rising cost pressures for the retail sector, according to the British Retail Consortium (BRC). The industry body said the latest projections show weak growth, rising unemployment and mounting operating costs that could affect jobs and investment across UK retail.

Responding to the government’s economic update, BRC chief executive Helen Dickinson said the figures “underline the scale of the economic challenge” facing businesses and workers. She noted that “growth is fragile, unemployment has climbed to 5.2% and is expected to rise, and businesses are cutting back.”

The Spring Forecast follows the government’s economic statement delivered by Chancellor Rachel Reeves and updated projections from the Office for Budget Responsibility (OBR).

The watchdog has lowered UK growth expectations for 2026 to around 1.1%, reflecting continuing economic uncertainty.

Economic data included in the Spring Forecast points to a cautious outlook for UK businesses. The BRC highlighted concerns about weakening labour market conditions and declining business confidence.

Dickinson said the immediate concern is employment across sectors such as retail. “While household finances may improve later in the Parliament, the immediate risk is to jobs, especially in retail,” she stated, adding that job vacancies are already falling while confidence remains weak.

Retail is one of the UK’s largest private sector employers, supporting millions of jobs nationwide. Recent surveys indicate retailers are already adjusting operations as economic conditions tighten. Rising labour costs and cautious consumer spending have led some businesses to reduce hiring or review staffing levels.

The sector has also faced structural changes, including automation and competition from online marketplaces, which have contributed to job losses in recent years.

One of the main pressures highlighted by the BRC is the sharp increase in employment costs facing retailers. According to the organisation, labour expenses rose by more than £5bn in the past year.

“Retailers face a cost of doing business crisis,” Dickinson said, pointing to increased wage bills and higher employer contributions as key drivers of cost inflation.

She also warned that new regulations could add further pressure if not implemented carefully. “Poorly implemented reforms in the Employment Rights Act risk adding further cost and complexity at the worst possible moment,” she said, adding that policy changes should “raise standards without deterring hiring.”

These rising employment costs come at a time when retailers are already managing thin profit margins and ongoing investment in digital operations, supply chains and physical stores.

The BRC also used its response to renew calls for reform of the UK business rates system, which it says continues to affect high street retailers.

Dickinson argued that retail property taxes remain a structural challenge for the sector. “Our high streets are the backbone of local economies, yet business rates continue to undermine their viability,” she said.

Although the government has introduced some reforms, the BRC believes the current system places a disproportionate burden on physical retail locations compared with online competitors.

The organisation said reducing the overall cost of doing business in retail would help companies invest more in staff, stores and pricing strategies. Dickinson said the sector is ready to support economic growth across the country but requires clearer policy conditions.

“Retail has unparalleled reach across the country and stands ready to work with the Government to unlock opportunity in every part of Britain,” she said. “But Government must get a grip on the cost of doing business so retailers can invest confidently in people, places and prices.”

The BRC’s response highlights the tension between improving macroeconomic indicators and the operational pressures facing businesses.

For many retailers, the coming year will depend on how policy changes, labour costs and consumer spending evolve in the UK economy.

“UK Spring Forecast raises retail sector concerns, says BRC” was originally created and published by Retail Insight Network, a GlobalData owned brand.

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