High street electrical retailer Currys has warned shareholders that it expects to face £32m in extra costs due to policies from the Budget, which will lead to “inevitable” price rises.
The company joins many other retailers and hospitality companies in complaining that Rachel Reeves’s budget in October will mean higher staffing costs after she raised the amount of employers national insurance businesses must pay.
The move hit big employers the most, as the minimum wage is also due to rise.
Alex Baldock, Chief Executive of the company bemoaned “new and unwelcome headwinds from UK government policy. These will add cost quickly and materially, depress investment and hiring, boost automation and offshoring, and make some price rises inevitable.”
The government has said it must mend the UK’s finances and businesses must pay their share of the cost.
Currys joins BT, Marks & Spencer and most supermarkets in suggesting that prices rises could be on the way.
Currys said it was back to being profitable for the six month trading period to 26 October after posting a loss a year ago.
“We’re very encouraged by our progress. Currys’ performance continues to strengthen, with profits and cashflow growing significantly,” Mr Baldock said. “One highlight is rising demand for AI laptops, where we enjoy over 75% market share in the UK. AI is a trend with a lot further to run.”
Confidence among business leaders has tumbled to a two-year low following Rachel Reeves’s autumn Budget, where she told employers to cough up billions of pounds more in national insurance payments.
The latest business trends report published this week by accounting firm BDO said it also saw the biggest month-on-month fall in sentiment among businesses since 2021, following the Budget.
Bosses expect orders to fall, costs to rise and consumer confidence to be hit.
The BDO optimism index fell 5.81 points to 93.49 this month – the lowest since January 2023.
Businesses face a 1.2 percentage point increase in employers’ national insurance, to 15 per cent, in a bid to raise £25bn. Ms Reeves also lowered the threshold on which the tax is paid.
