Primark owner’s boss warns Reeves not to give consumer sentiment ‘another great whack’ in budget
The chief executive of the Kingsmill owner Associated British Foods (ABF) has warned Rachel Reeves not to give consumer sentiment “another whack” in her upcoming budget, despite signalling that food price rises had peaked and will now start to ease.George Weston, the chief executive of the ABF conglomerate which also owns the fashion chain Primark and produces sugar and cooking ingredients, said recent food price inflation had been driven by employers passing on increases to labour costs announced in Reeves’ first budget as chancellor last year.He said most retailers had now passed these costs on and “food inflation will be gradually easing from now” as the cost of commodities was “pretty benign”.Grocery inflation stood at 5% in August, according to the latest data from analysts Worldpanel, contributing to wider inflation, which rose to 3.8% in July.
He added that Primark had not raised clothing prices in a year as it had been able to offset higher labour costs with more technology, such as self-service tills and lower freight and cotton prices.Weston said given the higher food prices, Primark’s shoppers had kept a tighter rein on spending than more affluent consumers.“We had to work very hard to earn our shoppers’ money, as we are not in an easy consumer environment,” he said, with sales in the UK and Ireland rising by 1% over the six months to 13 September, helped by new store openings.But shares in ABF slid more than 13% on Wednesday as analysts said trading at Primark’s mainland Europe outlets had been worse than hoped.The company also warned that sugar profits would be below expectations.
ABF’s sugar business, which includes the closing Vivergo ethanol plant, is also likely to make a £40m loss, much deeper than feared.The company said group sales are expected to have fallen by 2% at established Primark stores in the six months to 13 September, with sales flat at established UK stores and sales falls in Germany, France and Italy.Weston blamed “political turmoil” in France, which was the worst performing country, and consumer uncertainty elsewhere in Europe amid the Ukraine war and inflation.Weston said Primark was “trading very strongly” as a seasonal change in the weather had led to demand for warmer clothing and it had sharpened up its fashion ranges, particularly on denim.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionHe said that Primark continued to gain market share in a flat UK market despite heavy competition from Shein, the Chinese-founded online fashion seller.
Many retailers fear Reeves will impose further tax increases on businesses in her 26 November budget,Weston said: “I hope consumer sentiment doesn’t take another great whack in November … anything that reduces returns on investment or increases the costs of employing people [could affect sentiment]”,Weston said he would like to see Reeves’ November budget “closing that big loophole around de minimis” – a tax break that allows Shein and others to import items worth less than £135 direct to consumers without paying customs duty,“I don’t like to be faced with competition that has an unfair advantage which could be costing the Treasury maybe £100m a year,” he said,“A lot of money is being left on the table unnecessarily.
”He also called on the chancellor to revise plans to increase business rates for large high street stores.
Stagnant GDP shows scale of challenge for Rachel Reeves at autumn budget
“Our economy isn’t broken, but it does feel stuck,” is the message from Rachel Reeves.Having made rebooting the economy the No 1 priority for government, it is a brutally honest assessment from a chancellor more than a year into the job.The latest GDP figures, released on Friday, highlight the scale of the challenge for Reeves at her autumn budget. Growth flatlined in July, slowing from 0.4% in June, as the economy struggled for momentum over the summer
Britain is ‘a terrible place’ to sell medicines, says drug firm executive
A senior pharmaceuticals executive has called on the government to come up with a “proper” roadmap for raising spending on new medicines, saying Britain is “not a good place” to develop or sell drugs.Paul Naish, the UK head of market access for the French company Sanofi, said Britain was “at a critical point”.He added: “We’ve still got the best universities, we’ve got some of the best scientists in the world, but it’s not a good place to do the development work for medicines. It’s an expensive place to operate, and it’s a terrible place to sell medicines.”The drugmaker MSD, known as Merck in the US, this week ditched its under-construction £1bn research centre in London
Business rates rise would put hundreds of big shops at risk, say UK retailers
Up to 400 large shops are at risk of closure with as many as 100,000 jobs at risk if the government goes ahead with plans to hit stores with higher business rates, retailers have warned.Some of the UK’s largest retail premises, including supermarkets and department stores, would face higher property tax charges under new rules being considered by the government before November’s budget.The higher charges for larger sites, including warehouses, offices and other premises, are intended to pay for discounts for smaller business properties, such as independent retailers, cafes and pubs, after the Labour government pledged to make the business rates system fairer.The bosses of big retailers including John Lewis, Lidl and B&Q met the chancellor, Rachel Reeves, last week to ask her to exclude retail from the surcharge.The new rules are targeted at all business premises with a rateable value – a figure linked to rents – of more than £500,000
MPs raise concerns over Asda’s link to app offering high-interest loans to staff
An influential group of MPs has sought assurances that Asda is not “squeezing staff” to drive profit after it emerged they are being offered high-interest loans by Wagestream, a company in which the retailer’s owner has a stake.The business and trade select committee has written to Asda over its links to the “financial wellbeing app” that recently began offering the supermarket’s staff loans of up to £25,000. The default arrangements for Wagestream’s “workplace loans” involve debt repayments being directly deducted from workers’ pay packets.A holding company controlled by Asda’s private equity owner TDR Capital is a shareholder in Wagestream, which has been offering Asda workers a range of other services, including savings pots and wage advances, since 2023.Documents filed at Companies House show that the holding company, Bellis Financial Investments 2, is one of a number of shareholders in Wagestream, alongside former Wonga payday loan investor Balderton Capital, and social impact investors including the Joseph Rowntree Foundation via the Fair by Design Fund
Paramount Skydance reportedly preparing takeover bid for Warner Bros Discovery
Paramount Skydance is reportedly preparing a takeover offer for Warner Bros Discovery, in a bid to pull together two of the largest US legacy media conglomerates and Hollywood movie studios.Less than a month after Skydance, a production firm run by David Ellison, son of the billionaire tech mogul Larry Ellison, closed its merger with Paramount, the firm is considering other blockbuster deals.Combining Paramount with WBD would reshape the US entertainment and media industry, shifting prominent brands in TV, cinema and news – from South Park and Superman to CNN and 60 Minutes – together for the first time.Paramount is preparing a majority cash bid for WBD that would be backed by the Ellison family, according to the Wall Street Journal, which cited unnamed sources familiar with the situation. Paramount and WBD did not immediately respond to requests for comment
UK must heed Sir John Bell’s big pharma investment warning
Compare and contrast. Here is the opening line in the government’s response to news that the US pharmaceutical company Merck is scrapping its £1bn research centre in King’s Cross in London because it thinks the UK is not an internationally competitive venue. Whistling cheerfully, the Department for Science, Technology and Innovation managed to claim: “The UK has become the most attractive place to invest in the world.”And here is Sir John Bell, former regius professor of medicine at the University of Oxford and all-round grand guru of life sciences in the UK. He told Radio 4 he had spoken to several chief executives of large pharmaceutical companies in the past six months “and they’re all in the same space, and that is, they’re not going to do any more investing in the UK”
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