Bernstein outlines what the UK Budget means for European retailers

British retailers are lobbying the government to exempt them from the highest business rate in its Budget on Oct 28, after Tesco, Sainsbury’s and Marks & Spencer paid £736 million, £425 million and about £180 million respectively in business rates in 2025/26, Bernstein analysts said.

Business rates are taxes on commercial property, worked out by applying a multiplier to a property’s assessed rental value. Bernstein said they are one of the largest parts of the retailers’ tax bills, ahead of profit tax.

Bernstein sees three possible outcomes for retailers: no change, including a higher multiplier only for some non-retail property such as expensive offices; an exemption for retail properties from the highest multiplier, which it called the best case; or a higher top multiplier for all properties including retail, which it called the worst case.

The British Retail Consortium (BRC), the industry’s trade body, wants the inflation-linked rise in business rates frozen. M&S Chief Executive Stuart Machin has argued that retail makes up around 5% of the economy but pays over a fifth of all business rates.

Tesco and Sainsbury’s paid £843 million and £316 million respectively in employer national insurance in 2025/26. In April 2025, the pay threshold for employers was cut to £5,000 from £9,100 and the employer rate rose to 15% from 13.8%, hitting firms that employ many entry-level, part-time staff.

The BRC wants the threshold raised to £6,000, which at the current 15% rate would save an employer up to £150 a year for each employee covered. 

Bernstein outlines what the UK Budget means for European retailersThe Financial Times reported earlier in October that the government had rejected calls to exempt employers from national insurance on workers under 25.

The Budget is expected to focus on boosting consumer spending, Bernstein said, as the UK shopper is under pressure. Next lowered its UK guidance for the second half and Sainsbury’s missed on second-quarter like-for-like sales. Bernstein expects the pressure to grow as fuel inflation continues and food prices pick up.

Possible help includes energy bill support, changes to income tax thresholds, a freeze on fuel duty, reversing a planned freeze on the student loan repayment threshold and support for first-time buyers.