Lidl boss warns retailers are ‘reeling’ after Budget tax raid
The boss of budget supermarket Lidl has warned retailers are “reeling” following Labour’s tax raid in the Autumn Budget.
The German supermarket’s UK boss Ryan McDonnell said the discount brand was staring down the barrel of “tens of millions of pounds” in extra costs.
This comes after the Chancellor unveiled a £25.7bn tax-raising package, with a change to employers’ national insurance contributions. This increased the rate of tax and reduced the level at which they must pay.
Retailers are also set to be hit by an increase to the national minimum wage and packaging levies
This week, Lidl joined other retailers including Tesco, Asda and M&S, in warning the Chancellor job losses would be “inevitable” and price rises nailed on, because of the changes.
In a letter coordinated by the British Retail Consortium (BRC), 79 signatories, including bluechip retailers, Next, and Greggs, said they had “significant concerns” about the impact of the Budget on the retail industry and its knock-on effect “for inflation, employment and investment”.
The retailers joined hospitality bosses and farmers in warning that cost hikes in the Budget – including the minimum wage, inheritance tax and employer’s national insurance contributions (NICs) – will decimate family businesses and labour-intensive sectors.
On Tuesday, tens-of-thousands of farmers descended on London to protest against inheritance tax changes for their land, as they warned it could impact food security and prices in Britain.
Yesterday, the governor of the Bank of England, Andrew Bailey, said the group of 70 retailers were “right” to warn of sweeping job cuts as a result of Labour’s punishing £40bn tax raid at the Budget.
Budget will mean “greater inflationary pressures”
Ryan McDonnell, Lidl GB chief executive, told the PA news agency: “There is a lot of impact that we will have to negotiate and I think the letter shows that the industry is reeling a lot.
“We are talking about £7bn for the whole industry. For us it will be somewhere in the tens of millions.”
He said that the jump in costs will result in “greater inflationary pressures” but stressed that it will “maintain market-leading pricing”.
This comes as Lidl said it had a surge in sales for the past year, as Brits switched from rivals in search of cheaper offers.
New accounts showed Lidl GB’s revenue increased by 16.9 per cent to £10.9bn for the year to February.
It also swung to a pre-tax profit of £43.6m for the year, after posting a loss of £76m a year earlier.
Lidl now has 960 stores in the UK and is the sixth largest grocery chain, according to Kantar.
With contribution from – Press Association – Henry Saker-Clark