The UK Chancellor is set to announce a National Insurance hike impacting major supermarkets.
- Tesco, Sainsbury’s, Asda, and Morrisons could see a £200m rise in contributions.
- The increase involves a two-percentage point hike in employer contributions.
- Retail experts predict significant impact on operating costs.
- Supermarkets are also facing other financial pressures with rising wages.
The impending Budget announcement by the UK Chancellor involves a notable rise in National Insurance contributions, primarily affecting the country’s largest supermarket chains. This decision is expected to result in these retailers, including Tesco, Sainsbury’s, Asda, and Morrisons, incurring an extra £200 million in expenses, as confirmed by reports from Sky News.
Tesco, one of the key players with a workforce of approximately 300,000 individuals in the UK, might bear an additional burden of up to £75 million due to this hike alone. This financial change comes as part of a two-percentage point increase in employer National Insurance contributions, adding to the fiscal pressures on these retail giants.
Stuart Machin, CEO of Marks & Spencer, voiced strong opinions regarding the tax rise, suggesting it is a convenient option rather than a tough decision. According to Machin, the increase could temporarily bolster public finances but might challenge economic recovery by placing added strain on customers and staff who are already grappling with living costs.
Aside from the tax implications, major retailers are bracing for increased wage expenditures, stemming from the Chancellor’s confirmation of a minimum wage uplift. From April 2025, the minimum wage is set to rise by 6.7%, with the National Living Wage escalating 6% from £11.44 to £12.21 an hour. Additionally, those aged 18 to 20 will see their wage increase by £1.40 per hour, bringing it to £10.
Paddy Lillis, General Secretary of the shopworkers union Usdaw, welcomed the wage hikes, highlighting them as essential advancements following a prolonged cost-of-living crisis. He acknowledged the Labour party’s commitment to advancing towards a real living wage and expressed optimism that these efforts would be a stepping stone towards establishing a £15 hourly wage.
The National Insurance rise, combined with higher wage bills, presents a complex financial landscape for leading UK supermarkets.
