Morrisons CEO Rami Baitieh has expressed concerns about the upcoming financial pressures on businesses as a result of recent government budget decisions.
Chancellor Reeves’ budget announcements in October have set a challenging landscape for businesses, introducing measures including changes to business rates, a packaging levy, and increased minimum wage. These are to be implemented from April 2025, alongside an increase in employers’ National Insurance contributions from 13.8% to 15% for earnings above £175 a week.
Rami Baitieh has highlighted that the National Insurance change is particularly burdensome, estimating it will cost Morrisons approximately £75 million. He remarked, ‘The National Insurance change adds insult to injury. The problem is that it’s an avalanche of costs that is coming all at once.’ His analogy compared the situation to gradually increasing medication dosage rather than an abrupt change, suggesting a phased approach might mitigate the impact.
The concerns are not isolated to Morrisons, as other major UK supermarkets anticipate significant financial implications. For instance, Sainsbury’s forecasts a £140 million rise in its National Insurance bill, whereas Tesco anticipates an additional £1 billion over the forthcoming four years.
With a collective voice, more than 70 companies, including the top supermarkets, have reached out to Chancellor Reeves. They have pointed out that the combination of increased National Insurance contributions, the rising national minimum wage, and new packaging levies could inflate retail costs by up to £7 billion annually.
The retailers warn of ‘inevitable’ job cuts and price hikes as a consequence of this financial strain. This broad industry appeal underscores the magnitude of concern over the government’s fiscal strategy and its potential ripple effects across the retail sector.
The call from the retail giants points to significant unrest in the industry over financial sustainability, urging a reconsideration of the proposed cost implementations.
