Story Highlight
– Limited relief for retailers in UK’s Autumn Budget.
– Small Business Rates Relief threshold increased for eligibility.
– Rising costs continue to pressure medium and larger businesses.
– Employment costs and consumer confidence remain key challenges.
– Lack of VAT-free shopping for tourists criticized by retailers.
Full Story
The recent Autumn Budget in the UK has provided only minimal support to retailers grappling with escalating operational costs, with the watch and jewellery sector now evaluating the impact of specific business rates relief amid continued pressures on staffing and overhead expenses.
Announced on 28 October, the Budget features an increase in the threshold for Small Business Rates Relief for qualifying retail, hospitality, and leisure properties in England. It also includes adjustments intended to enhance VAT collection from online marketplaces. Additionally, measures aimed at bolstering household finances could potentially boost consumer spending as the festive season approaches.
However, the British Retail Consortium (BRC) has expressed concern that the measures fall short for the sector, especially for medium and larger enterprises.
For watch retailers, the ramifications of these changes extend beyond the lucrative Christmas season. Decisions regarding store investments, recruitment, and expansion into 2027 will be influenced by property rents, employee costs, and consumer confidence levels.
Helen Dickinson, chief executive of the BRC, remarked: “Today’s Budget will see retail costs keep climbing as the Chancellor failed to provide the breathing space he promised. Retail faces £41 billion in business taxes this year, over 120,000 jobs have been lost in just two years, and one in seven shops lies empty. Yet employment costs continue to rise. Business rates continue to rise. The Government cannot keep talking about reviving high streets while failing to address the rising tide of costs that holds them back.”
A central component of the Budget’s strategy is the increased Small Business Rates Relief threshold, which the government estimates will exempt around 70,000 additional retail, hospitality, and leisure firms from business rates. Furthermore, a two-year freeze on business rates bills in real terms for these sectors in England was also announced. Despite this targeted support, the BRC highlighted that larger retail operations will still bear considerable cost burdens.
“This was a smoke and mirrors announcement on business rates,” Dickinson stated. “The Chancellor’s headline announcement that he will ‘freeze [retail, hospitality and leisure] rates in real terms’ means a 3.5% increase – another body blow to high streets already struggling with rising costs and empty units.”
It is estimated that this change will result in an added £250 million to the overall bill for retailers next April. Dickinson cautioned that, while the expanded relief is welcome, it is insufficient to counterbalance the overall financial strain faced by many businesses.
“For independent jewellers in smaller stores, the relief on business rates could be beneficial. However, larger jewellery chains and watch retailers with multiple locations are closely monitoring how these developments may affect their property costs and investment strategies,” she said.
Dan Parr, senior vice president at CACI and chair of Revo, representing over 6,300 retail and leisure locations across the UK, emphasised the importance of including larger retailers in considerations for support.
“Retail and leisure came into today’s Budget seeking relief from a cost base that has risen sharply over the past two years. The increase in the Small Business Rates Relief threshold will ease pressure for some, but many will be disappointed that policy didn’t extend a bit further, reflecting the sector’s collective contribution.”
Parr elaborated that investment from larger retailers is vital for invigorating high streets and bolstering surrounding businesses.
“As part of Revo’s submission to the recent Revitalising High Streets Inquiry, we were keen to stress that High Street success would also need to work for larger brands, as critical anchors for places that bring consistent footfall, spend, and investment. The focus of today’s Budget appears to be on supporting smaller businesses, but inspiring investment from bigger businesses is equally important.”
Rising employment costs also pose challenges for retailers. The Budget includes a 3.9% increase in the National Living Wage, which will rise to £13.21 per hour for eligible workers aged 21 and over from April 2027, while employer National Insurance Contributions are set to remain unchanged.
This combination of growing wages and persistent costs for property may complicate recruitment and staffing decisions, especially for watch and jewellery businesses where customer service and product expertise are critical.
The BRC indicated that the latest wage increase will exacerbate the £6.5 billion in additional employment costs that retailers have faced over the past two years by adding an additional £2 billion.
“Retailers want to pay colleagues well, but the Government cannot ignore the fact that today’s announcement adds another £2 billion on top of the £6.5 billion in additional employment costs that retailers have faced over the last two years. With over 120,000 jobs already lost since 2024, the country cannot afford to wait until the 2027 Budget and the outcomes of the Milburn review for action. The Chancellor needs to make it easier, not harder, to give young people a start. Today, he failed to do that,” Dickinson remarked.
The impact on various businesses will differ depending on size, staffing models, and eligibility for relief; nevertheless, the dual pressures of increasing wages and persistent property costs will compel retailers to weigh the importance of investing in staff and store infrastructure against maintaining profit margins.
As retailers head into the critical Christmas trading period, the Budget’s measures designed to ease household financial pressures could offer some encouragement. The CACI Consumer Confidence Index for October 2026 stood at -7, the same as a year earlier. Though concerns remain, some signs point towards a slightly more optimistic future outlook for consumers.
Parr interpreted the data positively: “CACI’s latest research delivered a Consumer Confidence Index for October 2026 at -7, exactly the same as last year. The index runs from -100 to +100 and combines how people feel their finances have changed over the past year with how they expect them to change over the next. The previous 12 months saw -11, while the outlook for the next year is -3, indicating a more positive perspective. This is encouraging for businesses, and policies such as the £100 energy payment and VAT cuts should help enhance consumer sentiment ahead of Christmas.”
For watch and jewellery retailers, an uptick in consumer confidence may encourage discretionary spending. However, the negative overall sentiment suggests caution remains prevalent among buyers, complicating the prediction of whether increased optimism will translate into higher-value sales during the festive season.
In addition, the Budget proposes making online marketplaces accountable for collecting VAT on qualifying transactions from UK businesses using their platforms, a measure set to take effect in October 2027. The government has stated that this initiative aims to combat tax evasion and create a more equitable competitive landscape for both online and brick-and-mortar businesses.
While the BRC endorsed the principles of consistent VAT collection, it insisted that the implementation must be manageable for businesses already adhering to tax regulations.
“Retailers welcome measures to ensure VAT is paid fairly and consistently, regardless of where or how goods are sold. However, government must ensure the new rules are practical and do not place unnecessary burdens on businesses that are already complying with their tax obligations,” the BRC noted.
The body also reiterated its dissatisfaction with the UK’s choice not to reinstate VAT-free shopping for international customers, a policy crucial for luxury retailers in key tourist areas.
“The UK remains the only major European economy without a tax-free shopping scheme. Analysis has shown that such a scheme could create tens of thousands of new jobs and generate billions in additional tourism spending.”
Looking ahead, retailers in the watch and jewellery sector must navigate these complexities as they prepare for the crucial winter trading period, balancing the necessity of staffing and property investments against the backdrop of ongoing financial challenges.
While the Budget offers some targeted relief, the BRC and Revo have called for a more comprehensive approach that acknowledges the vital role of larger retailers in fostering investment and driving footfall to high streets.
As 2027 approaches, the sector’s immediate focus will be on capitalising on Christmas sales, followed by strategic decisions on staffing and property investment. Consumer anticipation may signal better financial conditions ahead, yet the overarching concern remains whether this positive sentiment can be converted into substantial sales while ensuring operational profitability.
