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UK high streets in crisis as 200,000 jobs disappear in 12 months

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·Senior City Correspondent, Yahoo Finance UK
·4-min read
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Chancellor Rishi Sunak visited Hamleys in London on Wednesday as shops were allowed to reopen across England. Photo: Treasury
Chancellor Rishi Sunak visited Hamleys in London on Wednesday as shops were allowed to reopen across England. Photo: Treasury

The high street has been engulfed in crisis after the collapse of three major employers in a week.

The demise of Arcadia, Debenhams and Bon Marche is likely to wipe out 26,500 retail jobs and puts the sector on track to lose 200,000 jobs this year. Experts expect the final figure to be even higher.

Labour leader Sir Keir Starmer on Wednesday urged the government to draw up a “comprehensive plan to save retail jobs and to provide the sector with the much greater support it needs through this crisis.”

Darren Jones, chair of the Business Select Committee, wrote to business minister Alok Sharma on Wednesday, urging him to set up a special task force to address the crisis in the retail sector. Jones called it “a dark week for bricks and mortar retail in the UK.”

Arcadia, which owns chains like TopShop, Wallis and Burton, fell into administration on Monday. 13,000 staff are at risk of redundancy unless a buyer can be found.

READ MORE: Arcadia collapse caps downfall of king of the High Street Sir Philip Green

On Tuesday rescue talks at Debenhams failed, leaving its 12,000 employees facing almost certain unemployment.

Bon Marche’s administration followed on Wednesday, putting another 1,500 jobs at risk.

The string of collapses has thrown into stark relief the crisis facing the high street. UK retail had already lost over 170,000 jobs so far in 2020, according to the Centre for Retail Research. Big names including Marks & Spencer (MKS.L), WH Smith (SMWH.L), and John Lewis have all announced thousands of job cuts so far this year.

A man walks down a deserted Camden high street in London. Photo: Vuk Valcic/SOPA Images/Sipa USA/PA
A man walks down a deserted Camden high street in London. Photo: Vuk Valcic/SOPA Images/Sipa USA/PA

“This is further evidence of the extremely tough trading environment that the retail industry currently faces,” said Tom Ironside, director of business & regulation at the British Retail Consortium. “With rent bills mounting and in-store sales back to zero for those in lockdown, many retailers are on a knife-edge.”

Physical retail — as opposed to online — has been struggling to compete with digital sales for years but the sector has been dealt a hammer blow by the COVID-19 pandemic, which forced retailers to shut stores for months at a time.

READ MORE: Business minister hints at possible investigation into Arcadia collapse

Shadow chancellor Anneliese Dodds said the “long-term trend” towards online shopping had been “compounded” by the pandemic.

“The first thing that needs to be done to protect retail jobs is to get a grip on public health,” Dodds told an online event hosted by Bloomberg on Wednesday.

WATCH: The colourful decades that ended in Debenhams’ downfall

Job losses so far this year have already surpassed the total for both 2018 and 2019, according to the Centre for Retail Research. The consultancy predicts that over 230,000 jobs will ultimately be lost from the high street his year and said 20,000 shops will shut.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the collapse of Arcadia and Debenhams was “the start of a painful shake-out of employment in the retail sector.” Tombs gave a similar forecast for job losses.

READ MORE: Pressure on Sir Philip Green to fill Arcadia's £350m pension scheme hole

The prime minister’s spokesperson said earlier this week the government was “committed to supporting the retail sector” and was “working closely with industry during these very challenging times”.

Chancellor Rishi Sunak on Wednesday said retailers faced a “tough winter” but said extensions to business rates relief and the furlough programme would help ease the pain. Junior business minister Paul Scully hinted that tax relief could be extended to help the sector. He said the Treasury were “very aware” of the “cliff-edge” when business rates relief ends next April.

“We will certainly look at that and an announcement will be forthcoming,” Scully said in parliament.

The retail sector employs almost 5 million people in the UK, accounting for 15% of all jobs.

WATCH: Why can't governments just print more money?

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