Britain’s biggest retailers demand Rachel Reeves outlines plan for growth amidst food inflation concerns
BRITAIN’S biggest retailers have demanded the Chancellor reduce inflation risks by easing cost pressures and outlining a plan for growth.
Tesco and Marks & Spencer both yesterday confirmed that prices would have to rise after the steep increase in wage costs from the Budget.
Meanwhile Tesco toasted its “biggest ever Christmas”.
The grocery giant revealed that despite the cautious consumer backdrop, shoppers had still splurged on its Finest range, with the premium line’s sales up 15 per cent.
But boss Ken Murphy said the chain would be facing a £250million increase to its wage bill from changes to employers’ National Insurance contributions.
He said there was “no doubt” that the Budget had “impacted the cost of doing business in the UK for all industries and particularly for retail”.
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He likened the hit to crises over the past four years including the energy price shock and pandemic.
Amid warnings that food inflation could rise to 4.2 per cent, Mr Murphy said the Government could do several things to help reduce the risks of price rises.
He said a “fair outcome” on the Government’s business rates review to reduce store costs and more flexibility on packaging levies would “significantly help retailers absorb the costs better”.
The British Retail Consortium has estimated that retailers face a combined £7billion increase in costs this year and said that the “only way for prices is up”.
Mr Murphy said that Tesco would flex its status as Britain’s biggest supermarket to drive efficiencies and keep a lid on inflation.
M&S chief Stuart Machin also hailed a “good Christmas” but said costs were now a top priority.
He said that the Budget would force the retailer to reconsider how many staff it would recruit and where they would be needed.
He said the chain’s turnaround and improved festive trading was down to its growth plan.
“We would like to see a growth plan for the country and a growth plan for business,” he added.
Despite strong results, shares in Tesco and M&S and bakery chain Greggs slumped yesterday as investors took stock of the increase in labour costs from the Budget and how inflation could dampen sales growth.
Danni Hewson, market analyst at AJ Bell, said: “It doesn’t matter that Brits were merrily gobbling up the finest pigs in blankets over the festive period, it’s how consumers are feeling in the cold light of January that really counts.
“Even the country’s flagship purveyor of Christmas food, Marks & Spencer, couldn’t avoid today’s rout despite delivering its best trading day ever in its food halls,” she added.
Shares in Tesco edged down by 0.54 per cent, M&S ended the day 8 per cent lower.
Greggs was the FTSE 250’s biggest loser, with its shares falling by 9.35 per cent.
Chancellor's lessons
THE festive updates from Britain’s biggest shopkeepers contain a few lessons for Chancellor Rachel Reeves.
First, set out a clear, achievable growth plan in the face of higher costs.
Second, hunt out efficiencies.
Third, start cutting spending.
It’s exactly what Ms Reeves needs to do to fix the economy, particularly when soaring interest on government bonds is squeezing the country’s finances.
M&S chief Stuart Machin neatly said that the best way to tackle inflation was growth.
He added: “The more we sell, the more it does to mitigate the cost pressures.”
It’s exactly the same for the economy.
Except the details about how and when Ms Reeves will get the growth are a lot fuzzier than most investors would let the boss of a FTSE-listed retailer get away with.
Diageo's dumped over jab
A RESPECTED fund manager has dumped his entire stake in Guinness-maker Diageo amid fears that weight-loss drugs such as Ozempic will hit alcohol sales.
Fundsmith boss Terry Smith revealed in his annual letter to shareholders that the £22.8billion fund had sold its long-held stake in the firm, which also makes Gordon’s and Tanqueray gin.
He said: “We suspect the entire drinks sector is in the early stages of being impacted negatively by weight-loss drugs.
“Indeed, it seems likely that the drugs will eventually be used to treat alcoholism.”
City traders are still trying to figure out how weight-loss drugs will affect food and drink companies.
Vauxhall EV relief
VAUXHALL owner Stellantis hit the Government’s mandate for electric vehicles last year, despite its outrage at the rules.
It comes just a month after Stellantis blamed the “stringent” zero-emissions regulations for the closure of its van factory in Luton, which put 1,000 jobs at risk.
Figures show the wider car industry missed the 22 per cent target, which will increase to 28 per cent this year and 80 per cent by 2030.
Lloyds shut risk
MORE bank branches are at risk of shutting as Lloyds Banking Group plots an overhaul of its network.
From later this year, customers will be able to use any of its Lloyds, Halifax and branches for in-person services.
But unions fear it will lead to closures in areas with more than one of its brands — as a quarter of the lender’s 932 branches are near each other.
Mark Brown, from union BTU, said 233 branches could shut “at the drop of a hat with thousands of job losses”.
Wage disgrace
BRIT workers will have lower wages in the long run after the Budget’s tax raid on businesses, a Bank of England rate-setter said yesterday.
Sarah Breeden believes National Insurance hikes mean firms will “pass the entire cost through into lower wages”.
Banknote grab
SHARES in 200-year-old British banknote printer De La Rue surged yesterday after a £245million takeover bid.
Edi Truell, a City financier, has tabled a 125p-a-share bid for the entire company.
It comes a month after Mr Truell’s funds had said they were exploring an offer for a 40 per cent stake.
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The deal is conditional on De La Rue’s planned £300million sale of its authentication division going through.
The Basingstoke-based firm has been struggling due to a slump in the use of cash.