Dragons’ Den icon Theo Paphitis has warned of mass closures if shops are hit even harder at the next Budget.
The businessman, who owns the stationary chain Ryman, issued a stark warning that the UK high street may not survive further tax hikes.
Companies are already being hit with hefty business rates – with speculation growing Chancellor Rachel Reeves may pile on the pain in the autumn.
Mr Paphitis highlighted the immense burden smaller businesses are carrying compared to online giants who are paying ‘next to nothing’.
Companies have faced difficulties due to the rise in National Insurance contributions and an increase in the minimum wage that surpasses inflation, both of which were implemented in April.
Theo Paphitis, writing for The Sun, stated: ‘After all the challenges the high street has endured, imposing even more pressure could be disastrous for many businesses.’
‘The government must ensure that no shop pays more in the upcoming Autumn Budget.’
He continued by stating: ‘Once a shop closes, reopening it is much more challenging and expensive, which means each closure inflicts a lasting impact on the high street’s vitality.’
Dragons Den icon Theo Paphitis has warned of mass closures if shops are hit even harder at the next Budget
Rows of boarded-up shops line the high street in Waterlooville, Hampshire
Chancellor Rachel Reeves during a visit to Studio Ulster in Belfast on August 12
Mr Paphitis has previously criticised the business rates system, which he says the government has failed to properly reform.
He argued that it unfairly hits bricks and mortar businesses, while online and technology giants only face the tax on their warehouses.
Mr Paphitis’s comments come as store closures this year are predicted to top 17,000 this year.
This is the largest number recorded since the Centre for Retail Research (CRR), the organization that compiled the report, started gathering this data in 2015 and follows the shutdown of 13,479 stores last year.
The vast majority of closed shops in 2024 – 11,341 – were independent retailers, a 45.5 per cent jump against the previous year.
Business leaders are urging the Chancellor to revise her tax policies immediately to prevent British high streets from turning into deserted areas.
The CRR predicts that 17,350 store closures will make 2025 even more devastating than 2022, when the end of government support after the pandemic resulted in 17,151 shop closures.
Around 16,145 stores shut their doors at the height of lockdown in 2020.
Store closure figures were compiled by industry experts at the Centre for Retail Research
Boarded-up shops in Reading. Experts have predicted that 17,350 shops will shut down in 2025
Professor Joshua Bamfield, director of the CRR previously said: ‘Whilst the results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse to come in 2025.’
Of the predicted 2025 figure, the vast majority of store closures, 14,660, are expected to be independent retailers.
These firms usually operate on very tight profit margins and may not have enough cash to cover the cost of the Treasury’s tax raid and minimum wage hikes.
‘This is a tragic scenario that we warned the government could come to pass if they did not change course,’ said Andrew Goodacre, head of the British Independent Retailers Association.
He added: ‘Overall costs for independent retailers are going up and the planned increases in National Insurance, minimum wage and business rates will leave many with no choice but to shut up shop.’
Ms Reeves declared in October that employers would pay a 15 per cent National Insurance rate on staff salaries exceeding £5,000 from April rather than the current 13.8 per cent levy on wages above £9,100.
She also said the National Living Wage would go up by 77p to £12.21 per hour, alongside increases in the capital gains tax rates on selling business assets.
Pedestrians pass boarded-up shops in Hastings, East Sussex, in March last year
Retailers have been among those leading the charge against the Chancellor’s punishing tax measures.
In November, more than 80 bosses signed an open letter to Reeves warning that her Budget plans would force them to hike prices, cut jobs and close stores.
Signatories included the heads of high street giants Marks & Spencer, Next and John Lewis as well as the major supermarkets such as Tesco, Sainsbury’s, Morrisons and Asda.
Meanwhile, firms have called for ministers to reform the business rates system to make physical shops more competitive with their online counterparts.
