Retail bosses warned that they will be forced to hike prices and cut jobs due to the government’s tax hikes, as the sector braces for a substantial increase in employment costs.

In a draft letter to the Chancellor, coordinated by the British Retail Consortium (BRC), retail bosses warned that job losses were “inevitable” and higher prices a “certainty”

The letter said the “sheer scale of new costs in the Autumn Budget and the speed with which they occur”, together with “costs from a raft of other regulation” create an unsustainable burden.

“It will not be possible for businesses to absorb such a significant increase to their cost base over such a short timescale,” the letter added. The letter was first reported by Sky News‘ Mark Kleinman.

In last month’s Budget, Rachel Reeves increased the amount employers have to pay in NICs by 1.2 per cent, and lowered the wage threshold at which employers must start paying the tax from £9,100 to £5,000.

The BRC has estimated that the changes will increase retailers’ tax burden by £2.3bn annually. Three-quarters of that is expected to come from lowering the earnings threshold.

Many retail businesses rely heavily on part-time workers, which were previously exempt from the tax.