Aldi CEO warns UK food prices could rise if Reeves doesn’t get Budget right for businesses
Aldi UK Chief Executive Giles Hurley has warned that consumers could face higher grocery prices if Chancellor Rachel Reeves further increases the cost of doing business in her upcoming Autumn Budget.
Speaking to the BBC, Hurley said that retailers were already paying a heavy cost for the National Insurance rise and the cost of new packaging rules, which were introduced last year.
“Any policies which affect the operating costs of business should be considered very, very carefully because of the very real risk they find their way… back into the food system and onto prices,” he said.
“If you speak to customers across the country, they’ll tell you that inflation is persistent and urgent,” said Mr Hurley. “Action is needed.”
He said more certainty and support for farmers was necessary to boost the amount of food produced in the UK, which could have a “really positive impact” on inflation.
“Ultimately, a resilient British food sector is utterly dependent on having a resilient British farm sector.”
Hurley’s comments come after the British Retail Consortium (BRC) warned that some of Britain’s biggest shops – from supermarkets to department stores – face a fresh wave of closures if the Government forces large shops into its proposed higher business rates tax band
There are approximately 4,000 large-format retail stores with a rateable value of over £500,000. Like all of retail, these stores are already under pressure by soaring employment costs, high taxes, and rising rates bills, which is why 1,000 such stores have closed over the last five years.
New analysis by the BRC shows that 400 large-format stores are at risk of closure, if they are included in the Government’s new business rates surtax on premises with a rateable value over £500,000.
The retail industry accounts for 5% of the economy, yet pays over 20% of all business rates bills. This load is keenly felt by large stores (those with a rateable value of over £500,000), which pay around a third of retail’s total business rates bill.
Given the small profit margins that exist across retail (around 2-4% for food), a significant rise in rates for large stores would force these shops to raise their prices, employ fewer people, or even close their doors entirely.
The BRC anticipates that if all 400 at-risk stores were to close, up to 100,000 jobs could be lost, and local councils’ business rates receipts from retail would fall by well over £100 million a year.
The BRC said it is calling on the Chancellor to use the Autumn Budget to deliver this vital change without simply shifting the cost onto larger stores – which would be massively damaging to our high streets.
This can be done without cost to the public purse, by removing those stores from the new higher business rates tax band and slightly increasing the rates to be paid by the remaining large properties like office blocks and other big commercial buildings, where business rates are a much smaller share of costs and the knock-on impact on jobs and prices is far lower, it said.
