Retail Sector Welcomes Budget Reprieve on Business Rates
The UK retail industry has expressed significant relief after Chancellor Rachel Reeves unveiled changes to business rates in the budget that were less severe than many had feared. Following months of warnings that punitive measures could trigger widespread shop closures and job losses, the announced reforms offered a moderated approach that industry leaders acknowledged could have been far worse.
On Wednesday, the government revealed plans to permanently reduce business rates for retail, hospitality, and leisure properties, though the discounts fall short of the generous pandemic-era support. Approximately 750,000 properties across these sectors will see their bills set below the current standard level, with smaller operators receiving deeper discounts.
Mixed Impact Across the Retail Landscape
While the overall picture brought relief, the details revealed a complex outcome. Global tax firm Ryan calculated that 3,480 retail properties in England with higher rateable values would collectively pay an additional £112 million in business rates from April 2026. However, the government is providing billions in "transitional relief" to cushion the blow for those facing dramatic bill increases next year.
The British Retail Consortium (BRC) had previously warned that a significant hike could jeopardise 400 large stores and 100,000 jobs. Reacting to the announcement, Sainsbury's Chief Executive Simon Roberts stated: "We welcome the government's decisions in the budget on business rates, and that industry concerns have been heard."
Analysts at Citi noted the outcome was better than expected, having previously predicted potential increases of £39 million for Sainsbury's and £100 million for Tesco. They confirmed the announced measures meant "that headwind is likely to be materially lower than we had expected."
Broader Industry Reaction and Concerns
The response from beyond the retail sector highlighted ongoing tensions. Helen Dickinson of the BRC described it as a "mixed bag budget" that provided relief for many shops while introducing new costs for others, particularly larger premises facing an additional surcharge.
George Weston, Chief Executive of Primark owner Associated British Foods, acknowledged the "positive" net impact for Primark but expressed disappointment that larger anchor stores weren't exempted from higher rates. Meanwhile, UKHospitality's Kate Nicholls voiced frustration, citing "wage rises, holiday taxes and monumental increases" in property values adding pressure to hospitality businesses.
The City found a silver lining in the chancellor's decision to introduce a three-year stamp duty holiday on shares of UK-listed companies. London Stock Exchange Chief Executive Dame Julia Hoggett welcomed the move as "a clear acknowledgment of the vital role equity markets play" in driving investment and job creation.
