The British Retail Consortium’s (BRC) latest survey of retail CFOs and Finance Directors has revealed a sharp rise in anxiety about labour costs over the next year.

With weak wage growth, low consumer confidence and rising business costs, CFO sentiment has deteriorated markedly in the past six months, its figures show.

More than two-thirds (69%) now describe themselves as ‘pessimistic’, up +13 percentage points since July last year. This downbeat outlook reflects ongoing unease about the 2025 Budget, which three-quarters (74%) of CFOs say has made investment harder.

Labour market pressures dominate CFOs’ worries for the year ahead, with 84% ranking labour and employment costs in their top three concerns. This has skyrocketed since last year, up from just 21% last July. Other risks include falling demand (77%), rising input costs (39%) and the growing tax and regulatory burden (29%).

“The economy is expected to remain fragile, with weak wage growth, unemployment rising and low consumer confidence, all pointing towards falling demand,” Helen Dickinson, Chief Executive at the BRC, commented. “At the same time, businesses face sharply higher costs, from rising input prices and wage bills to new burdens created by government policy.”

These pressures build on an already challenging backdrop after retail employment costs rose by £5bn in 2025 owing to increases to employer NICs and a higher NLW.

As a result, the majority of CFOs (61%) plan to cut hours or staff overtime and 45% are considering freezing recruitment. Retailers are now also focusing on making up for a smaller workforce by driving higher productivity (68%) and investment in automation (61%).