Rishi Sunak has been warned that his approach to Brexit red tape and the tax burden risk extending the UK’s cost of living crisis into 2024.
Britain’s biggest retailers said the hopes of cutting inflation next year was under threat because the cost of doing business was still too high.
The British Retail Consortium (BRC) said the struggle with costly post-Brexit bureaucracy risked prolonging ongoing price rises in the shops.
The retailers’ umbrella body also said measures set out by chancellor Jeremy Hunt at the autumn statement could also fuel inflation.
The BRC’s measure for shop price inflation eased to 4.3 per cent in November, down from 5.2 per cent the previous month.
But the organisation pointed out that the easing only means that prices in the shops and supermarket shelves are only rising less rapidly.
And the BRC said “hidden costs” of complying with post-Brexit rules had made it more difficult for businesses to keep prices down.
“Retailers are committed to delivering an affordable Christmas for their customers,” said the BRC’s chief executive, Helen Dickinson.
“They face new headwinds in 2024 – from government-imposed increases in business rates bills, to the hidden costs of complying with new regulations,” she added.
Rishi Sunak and Jeremy Hunt have come in for criticism over high tax burden— (PA Wire)
Ms Dickinson said: “Combining these with the biggest rise to the ‘national living wage’ on record will likely stall or even reverse progress made thus far on bringing down inflation, particularly in food.”
The BRC also said Mr Hunt’s decision to keep a planned increase in business rates from April would cost companies £400m next year, despite some breaks for smaller firms.
It comes after Bank of England governor Andrew Bailey suggested the UK economy’s potential to grow was among the worst he had seen in his lifetime.
The governor repeated his warning that interest rates would not be cut in the “foreseeable future” – having declared it was "much too early" to say inflation had been beaten.
It comes as Office for Budgetary Responsibility (OBR) chairman Richard Hughes told MPs that Mr Hunt’s autumn statement’s implied spending plans – which are set to involve major public spending cuts – were “a very big fiscal risk”.
The watchdog chief told the Treasury committee on Tuesday that it was “very difficult to assess the credibility of the government’s spending plans, because after March of 2025 the government doesn’t have any spending plans”.
Jeremy Hunt delivered some tax cuts, but faced criticism for overall tax burden and public spending cuts ahead— (Getty)
A spokesperson for the Treasury said: “It is thanks to our action that we’ve achieved our target of halving inflation this year, but we are continuing to stay the course to get inflation all the way back down to 2 per cent.”
“The OBR have confirmed that our policies will reduce inflation next year while boosting growth and rewarding people for their hard work.”
Meanwhile, in other Brexit news, foreign secretary David Cameron is expected to try to meet EU Commission vice president Maros Sefcovic as he heads to Brussels for a two-day summit.
In his first trip to the EU capital since his fateful Brexit referendum, Mr Cameron will join a Nato meeting of foreign ministers set to discuss the Ukraine war.
But Lord Cameron is reportedly ready to raise the issue of post-Brexit tariffs set to be imposed on the automobile industry into force in January if he meets Mr Sefcovic this week.
Mr Sunak’s government is pushing the EU Commission to agree to delay the costly new “rules of origin” set to damage the electric vehicle (EV) market due to come in at the start of 2024 as part of Boris Johnson’s trade deal.
