LONDON, Nov 26 Reuters British retailers39; optimism has fallen to a twoyear low following finance minister Rachel Reeves39; first budget as they brace for higher employment costs and soft consumer demand, the Confederation of British Industry said.

Reeves announced a 25 billion pound 31 billion increase in employment taxes in her Oct. 30 budget and a 7 rise in the minimum wage, both of which will particularly hurt retailers with low margins and large numbers of staff.

The last time retailers felt this gloomy was back in November 2022, at the peak of the inflation shock, CBI lead economist Ben Jones said. The stark rise in Employers39; National Insurance next year will hit retailers hard.

The CBI39;s quarterly survey of retailers showed their assessment of the business situation dropped to 21 in November from 13 in August.

When the optimism balance was last lower, surging food and energy costs were causing consumers to tighten their belts and former prime minister Liz Truss39; budget plans had led to a jump in mortgage rates.

Consumers39; mood has been subdued, though not as bad as it was two years39; ago. The CBI39;s monthly retail sales balance sank to 18 in November from October39;s 6, its lowest since August, while the outlook for December retail sales sank to 29.

Official retail data for October showed a sharp fall in sales volumes.

Reeves told the CBI39;s annual conference on Monday she would never again make similar tax rises to those last month.

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