The chief executives of all major UK supermarkets, including Tesco, Sainsbury's, and Aldi, have issued a collective warning to the government. In a letter to the Chancellor ahead of the next budget, they stated that any increase in taxes, specifically business rates targeting large stores, would inevitably lead to higher food prices for consumers. They argued that this would undermine their ability to offer value, particularly as the industry is already grappling with over £7 billion in additional costs for 2025.
This warning comes as the government faces a difficult fiscal decision. While the Chancellor has stated she does not intend to raise taxes again, economists point to a £22 billion shortfall in public finances, suggesting further revenue measures may be unavoidable. The situation is compounded for consumers, as official data shows the prices of staples like butter and milk have already surged by 12-19% in the past year.
A central point of contention is the reform of business rates, which would impose a higher surtax on large supermarkets and their distribution warehouses. Retailers argue that while smaller shops get relief, larger stores—which make up a small fraction of all shops—already pay a third of the sector's total business rates bill. They are urging the government to ensure the reforms do not increase the overall tax burden on the sector, stating it is one of the simplest ways to help keep food prices in check.
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