Retail businesses on the High Street are still struggling with the economic repercussions of last autumn’s Budget and are apprehensive about the potential impacts of the upcoming one.
Katya Milavic-Davies, owner of four Myla and Davis hair salons, as well as the restaurant Llewelyn’s and the cafe Lulus in Herne Hill, south London, expresses her frustration: “It felt like a slap in the face.” To cope with the rise in National Insurance contributions and the national minimum wage increase, she found it necessary to boost her total revenue by £500,000 across her salons. She believes businesses like hers are being “penalized” for employing a significant number of staff.
“We’ve had to transfer those costs onto our customers and raise our prices as much as possible,” she explains, but warns that “there’s a limit and… we’re beginning to feel the pressure.”
Recent statistics from the Federation of Small Businesses indicate that almost one in three small enterprises anticipate downsizing, liquidating, or shutting down within the next year. Across the UK, 86% of small firms are worried about Budget decisions that they believe could adversely affect their growth strategies, according to new findings from Novuna Business Finance.
A YouGov poll involving 1,244 small businesses revealed that increases in taxes and fuel duty are leading the list of business owners’ concerns.
“It’s difficult not to feel like we, as employers, are not regarded as working individuals,” remarks Ms. Milavic-Davies. She adds that there is a “misconception regarding employers having unlimited financial reserves,” while in the hospitality and personal care sectors, profit margins are becoming “extremely thin.”
UK Hospitality, the trade organization for the industry, estimates that over 100,000 jobs have been lost in the sector since the last Budget.
Chief executive Allen Simpson warns, “If we don’t see changes on November 26, we can expect more job losses and more businesses to close,” urging for reductions in business rates, National Insurance contributions, and VAT to bring them in line with other European nations. “We need a Budget that is positively oriented towards hospitality to mend the damage.”
Charlie Gilkes, co-founder of Inception Group, which runs several bars in London, likens preparing for this year’s Budget to “having a dentist appointment.” “You know it’s going to be painful, and you just want to get it over with,” he shares.
Still nursing the wounds from the last Budget, he remains hopeful that “there could be some pleasant surprises from the Chancellor.” Mr. Gilkes advocates for “a fair adjustment” of the “excessively high” business rates and a VAT reduction akin to Ireland’s decrease from 13.5% to 9%, scheduled for July 2026.
Having opened his 90s-themed bar Bunga 90 in Covent Garden last September, he notes, “Before the last Budget, we had plans to open two to three more locations.” Each new venue brings in substantial revenues for the Treasury.
“If they lend us a hand, we can contribute to the growth agenda, but if it mirrors last year, it will have the opposite effect,” he cautions. “It’s been a perfect storm since Covid. If we receive the necessary support, we can thrive and contribute positively to the nation’s growth narrative.”
Ms. Milavic-Davies is calling for “a more nuanced tax system” that acknowledges the role her businesses play in driving employment stability on the High Street. “By supporting these labor-intensive sectors, you ensure the vitality of local communities and keep shops operational.”
In response, a government spokesperson stated, “Pubs, restaurants, and cafes play a crucial role in local communities. That’s why we are reducing licensing costs, lowering business rates, and assisting more hospitality ventures in providing outdoor dining and drinks service, in addition to cutting alcohol duty on draught pints and capping corporation tax.”
