Asda CEO Calls on Rachel Reeves to Cut Taxes

Asda’s chairman, Allan Leighton, has advised Chancellor Rachel Reeves to invest in Britain to grow the economy instead of implementing a new tax raid in the upcoming budget. Reeves is facing the challenge of filling a £50 billion gap in public finances while adhering to her fiscal rules.

One of the proposed policies under consideration is a "mansion tax" that would impose capital gains tax on high-value property owners when they sell their homes. Additionally, there are plans to extend the freeze on income tax thresholds, potentially pushing workers into higher tax bands as wages rise with inflation.

Reeves is also reportedly considering applying national insurance to rental income, along with raising business rates for larger premises, which would impact bigger supermarkets. Allan Leighton criticized these potential changes, stating they are "very unhelpful" and could contribute to inflation, affecting consumers.

Recent figures show that food prices have risen at the fastest rate in 18 months, with food inflation reaching 4.2% this month, the highest level since February 2024. The British Retail Consortium (BRC)-NIQ Shop Price Monitor highlighted the pressure on families dealing with the cost of living due to the acceleration in food prices.

Retailers, including Tesco and Sainsbury’s, have expressed concerns about further tax increases impacting UK living standards. They anticipate food and drink inflation to reach 6% later this year. Factors contributing to price increases include global supply costs, seasonal food inflation, the end of promotional activities, and rising operational costs.

The rise in food prices follows the Bank of England's acknowledgment that the increase in national insurance contributions has played a role in accelerating food prices. Retailers are striving to minimize price hikes for households but are facing challenges due to the additional costs introduced in the previous budget.