David Felwick

Britain's retailers are facing a £100 million bill following the national insurance increases announced in the Budget, a representative of the sector warns today.

The chairman of the British Retail Consortium, David Felwick, says the high street has kept the economy afloat in recent years but warns that the tax increases could dampen consumer spending.

He describes the one per cent national insurance increase as "significant" for the sector.

"There are 2.8 million employees in the retail industry, we estimate that NI contributions will cost more than £100 million," he told this website.

Felwick warns that the increase could have "an adverse effect" by reducing domestic demand and could hit job prospects within the sector.

"If you introduce a tax that makes it more expensive to employ people then the natural tendency will be not to increase your workforce," he said.

But Nick Bubb, a retail analyst with S G Securities, rejects claims that the Budget will hit retailers and dismisses talk of job losses as "sabre rattling".

"I think that retailers doth protest too much. One per cent from next April is a small price to pay given that not so long ago it was suggested that VAT could rise," said Bubb.

"On the whole this was a consumer-friendly budget and not a bad trade-off for retailers."