The Entertainer is suspending new store plans due to an increase in the national insurance budget
The Entertainer, one of the UK’s biggest toy stores, has abandoned plans to open two new stores following the government’s decision to increase employer National Insurance (NI).
Chief executive Andrew Murphy explained that rising costs had led to a hiring freeze at the company’s headquarters.
The decision underscores growing business concerns about the Budget changes, which increase the NI rate for employers from 13.8% to 15% from next April, with the tax threshold lowered from £9,100 to £5,000. The policy is expected to raise around £25 billion a year to stabilize public finances, following revenue cuts under the previous government.
Speaking to BBC Radio 4’s *Today* programme, Murphy said, “There is no objection to the government’s final policy… He stressed that The Entertainer had completed operational testing of two new locations, but the rise in NI changed the financial outlook, leading to store closures.
Some major companies, including Sainsbury’s and Marks & Spencer, have indicated that rising NI rates could lead to higher prices as businesses seek to manage rising costs. Sainsbury’s chief executive, Simon Roberts, has estimated that supermarkets face £140 million in extra costs, warning that, “They’re going to have to go into higher costs.”
Labor defended the tax hike as a way to “restore much-needed economic stability.” Chancellor Rachel Reeves responded to the criticism, saying, “We have to raise money to put the public finances in order.”
Some businesses are considering expanding operations outside the UK due to rising employer costs. Arnab Basu, CEO of Kromek, noted that the planned reduction of the US corporate tax under President-elect Donald Trump, coupled with lower energy costs, makes the US an attractive place to invest.
Similarly, Associated British Foods, the parent company of Primark, has suggested that the tax increase could prompt it to prioritize growth beyond the UK. CEO George Weston commented, “We are an international business and we have choices about where we invest.”
The Treasury has defended the NI reforms as vital to economic recovery. “This government is committed to delivering economic growth by boosting investment and rebuilding Britain,” a spokesman said.
The Entertainer decision highlights a wider trend of UK businesses reassessing domestic investment as they navigate an evolving tax landscape and rising operating costs.
