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The head of Tesco has issued a warning to the government ahead of the upcoming Budget, urging against imposing additional costs on UK retailers. Ken Murphy expressed concern over the significant increase in operating costs that the industry faced during the last budget, emphasizing that “enough is enough.” This comes as Tesco, the largest supermarket in the UK, raised its profit forecast for the year.
Chancellor Rachel Reeves is set to unveil the Budget on 26th November, with expectations of potential tax hikes. Retailers have been grappling with a series of added expenses since April, such as higher employer National Insurance contributions and increased minimum wages. Tesco has also been hit with charges for the cost of packaging recycling under the Extended Producer Responsibility program, amounting to £90m in levies.
Mr. Murphy highlighted the various factors impacting the industry’s cost of operation, including the rise in National Insurance rates and commodity prices. Despite these challenges, Tesco remains optimistic about its financial outlook, projecting full-year adjusted operating profits between £2.9bn-£3.1bn. The company attributes this positive forecast to increased shopper engagement due to price reductions on 6,500 items.
The Unite union criticized Tesco for profiting during the ongoing cost of living crisis, accusing the company of benefiting from corporate greed at the expense of workers. Unite’s general secretary, Sharon Graham, called for government intervention to address profiteering and ensure workers are not unfairly burdened by financial hardships. With sales data indicating a trend towards purchasing fresh ingredients for home cooking, Mr. Murphy suggested that consumers may be cutting back on spending in anticipation of the Budget’s impact on their economic circumstances.
As food and beverage prices continue to rise, households are exercising caution with their spending habits, waiting to assess the implications of the Budget and the overall economic outlook. Concerns over potential tax changes and economic uncertainties are driving consumer behavior, prompting a more cautious approach to shopping habits and expenditure decisions
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