Next week’s UK Budget could introduce fresh pressure points for major retailers, even as the Chancellor reportedly backs away from raising income tax rates, that's according to a research comment from UK-based analysts at Citi.
With attention shifting toward measures aimed at businesses, the bank’s analysts have modelled the potential hit from higher business rates on large-format stores, concluding that J Sainsbury PLC (LSE:SBRY) and Tesco PLC (LSE:TSCO) would be the most exposed, meanwhile, Citi sees JD Sports Fashion PLC (LSE:JD., OTC:JDSPY), Next PLC (LSE:NXT)and Currys PLC (LSE:CURY) feel lesser impact.
Citi also highlights a second policy risk gaining traction: the possible closure of the small-parcel duty exemption, a loophole recently targeted in the US and EU.
If applied in the UK, the bank believes it would slightly ease competitive pressure, particularly in the value end of the market, by levelling the playing field between established retailers and low-cost overseas importers.
With consumer sentiment weakening in the weeks leading up to the fiscal event, Citi argues that clarity on tax policy will be welcomed across the sector.
While uncertainty remains around the exact scope of business-focused measures, the analysts suggest that confirmation, either way, should help retailers firm up planning for 2025 after a volatile autumn trading environment.