Retailer's share prices are suffering this afternoon after chancellor Philip Hammond said the national living wage would rise in April next year.
The change will have a particularly large impact on retailers, as they employ large numbers of workers on low wages. After the announcement:
- Sports Direct's share price was down 3.27 per cent.
- B&M's share price was down 2.19 per cent.
- Tesco's share price fell 2.08 per cent.
- Marks and Spencer's share price fell one per cent.
- Associated British Food's share price fell 0.69 per cent.
The share price reaction follows on from comments made by RBC Capital Markets analysts.
Richard Chamberlain and Claire Huff of RBC wrote: "Any changes to living wage plans or rates of increase would affect the discounters the most as they have a higher-than-average number of employees earning the living wage, for example, B&M and Sports Direct."
The national living wage did not increase as much as it was expected to. The forecast figure was £7.60 an hour.
Many retailers have been trying to mitigate against the rises in the national living wage by slashing staff benefits and incorporating it into the hourly rate, with the John Lewis Partnership becoming the latest to consider changes to employee benefits. Former chancellor said this was not in the "spirit" of the law.