On Wednesday, October 30, 2024, British Prime Minister Rachel Reeves, outside Downing Street, 11, before presenting the budget in London, England.
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Home improvement retailer King Fisher has become the latest UK company to report negative impacts from UK Reves’ Budget Minister in October.
In a release of its annual revenues on Tuesday, Kinghisher, who owns B&Q, a home improvement retailer, said the government’s policies “had increased retailer costs and impacted consumer sentiment,” and said sales of high-value items had declined.
This is the latest in a UK company that has criticised Reeves’ bumper tax rise budget since the fall. The business is paying attention to Reeves’s spring statement, which is scheduled to update lawmakers on her latest spending and taxation plans at 12:30pm on Wednesday.
After the government pledged to increase national insurance contributions from employers in October, raising the country’s “national living wage” by 6.7% from April 1, the top of the company’s complaint list is the higher employment costs after the government pledged in October.
On Sunday, Reeves defended the tax rise before Wednesday’s statement, telling Sky News that the government “takes the necessary actions to ensure that public services and finances are in a position.”
However, many consumer-oriented businesses have flagged concerns about the labour government’s economic policy in revenue reporting this quarter. They include supermarket giant Tesco. The Tesco said higher national insurance contributions could cost up to £250 million ($324 million) per year, while Tim Martin, chairman of pub chain JD Weatherspoon, said the change would cost the pub all £1,500 a week.
Regis Schultz, CEO of Sportswear retailer JD Sports, said the policy means businesses are being seduced to reduce the number and time of staff.
This is because the UK is fighting the widespread uncertainty as a result of economic slump, rising prices and President Donald Trump’s global trade tariffs.
The Office of Budget Responsibility (OBR) is reportedly the country’s independent fiscal watchdog, downgraded its UK growth forecast for 2025 on Wednesday, halving its previous 2% estimate.
AB Foods, which owns Primark, a budget fashion retailer, has accused the labour government of contributing to the debilitating of wider consumers in the country. Finance Director Eoin Tonge told analysts that brand customers are cautious, citing “shock and fear, that’s what drives people to pull the corner.” That view was shared by clothing retailer Frasers Group. “We felt kicked in the face,” Chris Wooton, the company’s chief financial officer, told Reuters.
A large number of negative corporate commentary is expected to put pressure on Reeves ahead of her spring statement.
The UK retail consortium is asking the government to “inject trust in the economy” and warns that rising tax contributions and minimum wage in April will generate additional costs for retailers £5 billion, with “there are no more options other than pushing prices.”
The British Federation of Industrial Associations (CBI) said Reeves “on Wednesday we must inject business with serious confidence.”
“As a priority for the time being, the government should restructure it to not further raise its business tax burden during this parliamentary course,” CBI chief economist Louise Hellem said in a statement. “Setting ambitious goals for R&D spending, making it easier to invest in skills, and taking steps to alleviate the regulatory burden of the business will encourage a move that shows that government understands what it needs to see from the business.”
Meanwhile, Peter Oppenheimer, chief equity strategist at Goldman Sachs, told CNBC on Monday that concerns about consumer and business trust are focused on reducing costs rather than raising taxes this week, rather than raising taxes, but that focusing on improving government growth is “a commendable purpose, difficult to do.”
CNBC contacted the UK Treasury for comment.
– Holly Ellyatt of CNBC contributed to this report.
