JD Sports and Fullers warn that Budget will drive up prices

Prices in shops and pubs will rise as a result of business tax rises announced in the Budget, two bosses have warned.

Andy Higginson, chairman of JD Sports and the British Retail Consortium, which represents supermarkets, said tax increases from April, including a rise in national insurance, would lead to a rise in costs for shoppers.

Higher drink prices could be visible within six months, says Simon Emeny, the boss of Fullers, which owns around 400 pubs and hotels.

There is a growing response from companies to the higher costs they are facing the budget, but Chancellor Rachel Reeves has said that “businesses will have to absorb some of this through profits”.

From April next year, employers will have to pay NI 15% on salaries above £5,000, down from 13.8% on salaries above £9,100 currently.

Minimum wages are also set increase from April onwards.

On Wednesday, Mr Higginson warned: “I guarantee you today that if these things continue as they are now, without any feathering, we will see significant inflation in prices.”

He called on the government to “phase in” increases in national insurance and minimum wages for businesses “over the next two to three years” rather than in April next year.

“We just need to make sure that the immediate impact of all these things doesn’t come in one big lump and that the economy has time to absorb these changes in a way that doesn’t fuel inflation,” Higginson told the BBC. program.

The boss of JD Sports was one of more than 120 company directors sign a letter, published in The Times, supporting Labor ahead of the general election and endorsing the party’s economic plans.

The Chancellor’s budget included a total of £40 billion in tax increases.

More than half of this will be paid by employers, with the increase in National Insurance expected to raise £25 billion per year.

But there are concerns: the impact will still be felt by working people if companies decide to pass on the costs through higher prices and if wage increases are curbed.

Higginson said there was “still plenty of time” but added that it was “difficult to see that the actions so far really match the pro-business rhetoric from before the election”.

He said the Budget has created a “worrisome” backdrop for businesses at a time when economic growth is desperately needed.

“It doesn’t feel like a budget for working people. It doesn’t feel like a budget for growth. I think it will limit investment,” Fullers boss Emeny added.

The pub chain’s boss said businesses have still not fully recouped post-Covid profits, with the announced budget measures costing the hospitality sector “an extra £3.5 billion”.

“It is impossible that a sector like ours can bear this level of costs and only absorb it as profit,” he added.

Mr Emeny said the combination of NI and changes to the minimum wage would cost his company a further £8 million, although the company’s latest results showed an increase in sales and profits from food, drink and hotels.

In the six months to September, Fullers increased pre-tax profits by 21% to £17.6 million, compared to the same time last year.

According to the Office for National Statistics, the average price of a pint of lager in Britain was £4.47 in September, but the British Beer and Pub Association recently revealed that landlords are making 12p in profit per pint.

A London pub boss has said this is likely to be the case as a result of the budget, the price of a pint will increase by as much as 40 cents.