UK spring forecast raises concerns for retail sector, says BRC

The UK spring forecast highlighted a fragile economic outlook for the retail sector and growing cost pressures, according to the British Retail Consortium (BRC). The industry body said the latest projections show weak growth, rising unemployment and rising operating costs that could affect jobs and investment in UK retail.

Responding to the government’s economic update, BRC chief executive Helen Dickinson said the figures “underscore the scale of the economic challenge” facing businesses and workers. “Growth is fragile, unemployment has reached 5.2% and is expected to rise, and business is shrinking,” she noted.

The spring forecast follows the Government’s Economic Statement delivered by Chancellor Rachel Reeves and updated estimates by the Office for Budget Responsibility (OBR).

The watchdog has cut UK growth expectations to around 1.1% for 2026, reflecting continued economic uncertainty.

Economic data included in the spring forecast point to a cautious outlook for UK business. The BRC has highlighted concerns about weak labor market conditions and declining business confidence.

Dickinson said the immediate concern is employment in sectors such as retail. “While household finances may improve later in Parliament, the immediate risk is to jobs, particularly in retail,” she said, adding that job vacancies had already fallen while confidence remained weak.

Retail is one of the UK’s largest private sector employers, supporting millions of jobs across the country. Recent surveys show that retailers are already adjusting operations because economic conditions are tough. Rising labor costs and cautious consumer spending have led some businesses to reduce or review staffing.

The sector has also faced structural changes, including automation and competition from online marketplaces, which have contributed to job losses in recent years.

One of the main pressures identified by the BRC is the rapid increase in labor costs associated with retailers. According to the organisation, labor costs have increased by more than £5 billion in the past year.

“Retailers are facing a business crisis,” Dickinson said, pointing to rising wages and higher worker contributions as key drivers of cost inflation.

She also warned that the new rules would add more pressure if not carefully implemented. “Poorly implemented reforms to the Employment Rights Act risk further costs and complexity at the worst possible moment,” she said. She added that the policy changes should “raise standards without stopping recruitment.”

These rising labor costs come at a time when retailers are already managing shrinking profit margins and ongoing investments in digital operations, supply chains and physical stores.

The BRC also used its response to renew calls to reform the UK business rates system, which it says affects high street retailers.

Dickinson argued that retail property taxes are a structural challenge for the sector. “Our high streets are the backbone of the local economy, yet business prices continue to undermine their credibility,” she said.

Although the government has introduced some reforms, the BRC believes the current system places a disproportionate burden on physical retail locations compared to online competitors.

Reducing the overall cost of doing business in retail will help companies invest more in staffing, stores and pricing strategies, the organization said. Dickinson said the sector was ready to support economic growth across the country but needed clear policy conditions.

“Retail has an unrivaled reach across the country and is ready to work with the government to unlock opportunity in every part of the UK,” she said. “But the government must get control over the cost of doing business so that retailers can invest confidently in people, places and prices.”

The BRC’s response highlights the tension between improving macroeconomic indicators and the operational pressures facing businesses.

For many retailers, the coming year will depend on how policy changes, labor costs and consumer spending develop in the UK economy.

“UK Spring Forecast Raises Retail Sector Concerns, BRC Says” Originally developed and published by Retail Insights Network, a brand owned by Global Data.

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