Sainsbury’s boss Simon Roberts has added his voice to those of other retail industry leaders urging Chancellor Rachel Reeves not to increase taxes on retailers and their suppliers in the Autumn Budget, warning that this could lead to food price inflation.
CEO Roberts said that shoppers are being “cautious” ahead of the Budget on 26 November. He said: “What we don’t want to see is further impacts that may cause further inflation. No one wants to see inflation go any higher.” He added that Sainsbury’s, and the industry more widely, has had to “work really hard” to absorb the additional costs from new packaging regulations and the increase in National Insurance.
In October, M&S boss Stuart Machin advised the Chancellor to “back business, not burden it” and warned the Treasury against “plugging fiscal holes with tax rises, stoking inflation and suppressing demand.” Sainsbury’s, Boots and Tesco were among the retail organisations that signed an open letter to the Chancellor in August, sent by the British Retail Consortium, warning that tax increases in the Autumn Budget could break Labour’s manifesto pledge to raise living standards. “Labour’s manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk,” the letter reads.
“Fair game”
Despite Labour’s manifesto pledge, there’s increasing speculation from analysts that Reeves will have to raise taxes in the Autumn Budget to plug an estimated £51 billion black hole in public finances, driven by weaker economic growth, higher borrowing costs, and the need to rebuild a fiscal buffer obliterated earlier in the year. As the retail sector has defied expectations to grow for four consecutive months, with major retailers including Sainsbury’s, Next, Very Group and Amazon posting strong results, the sector may indeed be viewed as “fair game” – despite intensive lobbying from retail industry figureheads.
Some analysts are also floating the possibility of an increase to the basic rate of income tax – and if, as Simon Roberts and industry voices warn, higher taxes on retailers lead to higher prices at the checkout, this would be a double whammy for consumers, facing increased costs on reduced incomes. With confidence faltering ahead of the Autumn Budget, the pressure on the Chancellor has never been greater. Businesses and consumers alike may need to strap in for a challenging winter.
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