Current Affairs

Retail business running costs up £20bn since 2006

A British Retail Consortium (BRC) commissioned study by Oxford Economics has revealed that retailers’ operating costs have increased by a fifth since 2006.

BRC’s new pre-budget research has seen the association call on the Chancellor, George Osborne, to maintain retailers’ contribution to the country by reducing business costs and re-building consumer confidence.

In the study, it was show that costs of doing business have increased by 21 per cent – £20 billion – since 2006. Over the same period, retailers’ sales values increased by 12 per cent. The BRC believes that cost increases on this scale are forcing store closures and curtailing job creation.

While many private sector, market-sensitive costs such as rents have responded to economic realities, the research demonstrates that centrally-driven costs, such as business rates and utility bills, have increased sharply.

In the wake of numerous high-profile retail casualties, ahead of next month’s budget, the BRC has proposed the Chancellor helps consumers and cuts business costs to support jobs and growth.

Its proposed measures are: Support consumer confidence; speed up progress towards the target £10,000 per year personal allowance; control central costs; freeze business rates in April 2013; apply ‘one in, two out’ regulation; apply a ‘growth test’ to new regulation to stop growth-inhibiting regulation; preserve and create jobs; introduce a time-limed National Insurance holiday for companies taking on an unemployed young person; and provide central coordination on implementation of the Portas Review recommendations.

Director general of the BRC Helen Dickinson said: “Retail is a major force for good. It’s the UK’s largest private sector jobs provider and has been a powerhouse for investment and growth, even during the relentlessly tough times of the last few years.

“There were welcome measures in the Autumn Statement and the Chancellor has it within his gift to do a great deal more. Our figures show dramatic increases in operating costs, often as a direct result of Government decisions.

“Consumer spending accounts for two thirds of all expenditure in the UK. It must recover before the economy can, yet 2013 has begun with high-profile evidence that demand is weak and a painful restructuring of the UK retail industry is underway, as customers change the ways in which they want to shop.

“The Chancellor has the opportunity to improve the business environment as a way of re-establishing and maximising retail’s essential contribution to recovery. We’re setting out priorities to help achieve that most effectively.”

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