Retailers face collapse as prices rocket and High St misery ranges soar 25% after Budget

A wave of store chains and independent shops look set to collapse in the coming months as they are hit by spiralling costs after the Budget.

In yet another sign of the crisis on the High Street, insolvency specialist Begbies Traynor said 2,124 retailers were in ‘critical financial distress’, up 25pc on the previous quarter, according to the group’s Red Flag Alert report.

The alarming figures came a day after the Mail reported that more than 8,500 stores had closed down this year with the loss of 130,000 jobs. Industry experts warn worse is to come in 2025 as the sector faces a £7bn rise in the cost of doing business following the Budget.

The latest figures include a 29pc rise in the number of general retailers in ‘critical financial distress’ and a 17pc leap for food and drug retailers.

Dismal Boxing Day sales also heaped pressure on the High Street as the number of shoppers visiting stores fell 4.9pc on last year, MRI Software said.

Julie Palmer, a partner at Begbies Traynor, said the sector remained ‘under significant strain’, with pressure exacerbated by Labour Budget measures such as higher wages and National Insurance payments.

These will ‘significantly dial up the challenge faced by these businesses’, she said, adding: ‘Consequently, we expect elevated insolvency levels across this sector during 2025.’

Much of the blame is directed at Chancellor Rachel Reeves, who broke the Labour Party manifesto pledge not to raise taxes with a £25bn rise in employers’ National Insurance Contributions, while pushing through an inflation-busting increase in the minimum wage.

She has failed to reform the business rates regime clobbering the High Street, an issue highlighted by the Mail’s Save Our High Streets campaign, backed by household names such as B&Q and Currys. Retailers such as HMV and The Entertainer have already said they will not open new shops due to higher rates next year.

Andrew Goodacre, head of the British Independent Retailers Association, talked of ‘scary numbers that will only get worse next year with increases in business rates’, adding: ‘It should be clear to Government that High Street businesses need lower costs, not higher, otherwise we will see even more hollowed out High Streets.’

Business rates are a levy based on the rental value of a property – meaning shops pay a premium compared with online giants such as Amazon. Before the Budget, bosses called on the Chancellor to extend Covid-era relief schemes, which cut business rate bills by 75pc.

But in a blow to retailers, Reeves instead cut this to 40pc. And her proposed reforms have been criticised as not going far enough to help retailers.

James Lowman, head of the Association of Convenience Stores, said this would be ‘most significantly felt by those on High Street, and those running larger convenience stores and petrol forecourts’.