As the festive season unfolds, the sight of “Sale” signs on high street windows weeks before Christmas reflects a worrying truth. Retailers are struggling to make ends meet, slashing prices in a desperate bid to draw in shoppers. But behind the bargains lies a deeper crisis: Britain’s high streets are on the brink, and with tax rises, soaring costs, and falling consumer confidence, many businesses may not survive the coming year.
The high street’s decline has been a long time in the making, but April 2025 could mark the point of no return. Labour’s recent tax policies, skyrocketing energy prices, and entrenched bureaucratic hurdles have created a perfect storm. For many businesses, the only way out will be out of business.
The Weight of Tax Increases and Irrational Councils
The 2024 Budget brought a series of punishing tax measures that disproportionately target retailers. Employers’ National Insurance Contributions (NICs) will rise to 15% on salaries above £5,000 in April 2025, compounding wage increases driven by a 6.7% hike in the National Living Wage to £12.21 per hour. Retailers, already burdened by high staffing costs, will face even greater financial strain.
Business rates remain another immovable burden. Unlike private landlords, councils are locked into rigid pricing structures dictated by legislation. No rational negotiations or adjustments can be made to reflect a struggling business’s reality. Business owners are left paying fixed, inflexible rates regardless of their circumstances. For many, this inflexibility makes operating untenable—councils simply cannot act as rational players in commerce.
Economic Turbulence Adds to the Strain
On top of these structural pressures, the broader UK economy is faltering. GDP shrank by 0.1% in October 2024, and consumer confidence has plummeted as households cut back on discretionary spending. Retail sales fell by 0.7% in October, and forecasts suggest the festive season won’t deliver the reprieve many businesses desperately need.
Traditionally, Christmas is the most lucrative period for retailers, often determining whether they will stay solvent into the new year. A poor trading season, followed by higher taxes and rising costs in April, could spell disaster for many. The British Retail Consortium estimates that the retail sector will face an additional £7 billion in costs from recent tax changes alone—a figure that will push struggling businesses over the edge.
Energy Costs and Net Zero Targets
Labour’s ambitious net zero agenda has further exacerbated retailers’ woes. Energy prices, already among the highest in the world, continue to rise as the Government pursues aggressive decarbonisation targets. For shop owners, these costs are unavoidable—you can’t run a store without lighting or heating, no matter how expensive they become. Other industries can adapt, but retail faces fixed overheads that cannot simply be switched off.
A High Street in Decline
According to PwC, shops closed at a rate of 14 per day in 2023, adding over 2,300 empty premises to the UK’s town centres. Banks, pharmacies, and convenience stores have been particularly hard hit, alongside retailers like Wilko. While Labour promised to “save the high street” during its election campaign, their actions in government have achieved the opposite.
April’s tax hikes and soaring costs could push the high street into terminal decline. Councils, with their hands tied by legislation, cannot offer relief. Business rates remain a rigid, punitive expense that leaves no room for negotiation. Business owners who try to engage with local authorities face a bureaucratic brick wall. For many, the only escape from this inflexibility will be closure.
A Lifeline for Businesses: The Company Health Review
Yet even in this challenging environment, businesses can take action to weather the storm. GBMM’s Company Health Review offers struggling retailers the opportunity to assess their operations, identify inefficiencies, and implement cost-saving measures. From optimising tax strategies to managing employment costs, our expert team provides practical solutions tailored to your needs.
