The “disappointing” Budget for UK high streets will cost fashion giant Primark “tens of millions” of pounds, according to Associated British Food’s (ABF) chief executive George Weston.
The boss of Primark, which employs around 40,000 people in the UK, said he is “disappointed” that the set of tax rises as a result of chancellor Rachel Reeves’ Budget impacts the high street more than other business sectors.
Weston said the increased rate of employer national insurance from April next year will result in Associated British Foods’ national insurance bill increasing by “tens of millions of pounds”.
“We are particularly hit by the reduction in the threshold because we employ a lot of part-time people,” he told Retail Week. “From younger people who want to work on a Sunday or mums who want to work a few afternoons, these are people who we wouldn’t have been paying national insurance [for] before.
“I think this is a set of tax rises that affects the high street more than most other business sectors so we are disappointed by that.”
Talking about the Budget, Weston also told Retail Week he is disappointed the “tax loophole” on import duties hasn’t been closed, as well as the changes to the rates system taking a toll on “anchor” high street stores.
“I’m disappointed by the, I hope, interim changes to the rates system whereby those with high rateable values pay more. That’s going to hurt our bigger stores which anchor so many high streets and city centres these days,” he said.
“I think it’s very unfortunate that the anchors of the high street should be asked to pay more at a time when it’s expressed government policy to support high streets, so I don’t think that’s great.”
He went on to say that ABF welcomes the increases in national living wages and that Primark could “disproportionately benefit” from them.
“We know just how hard many families are finding it,” said Weston. “If the least affluent in our society have a bit more money then that’s a good thing in its own right, but I think they will also spend more of it with us.”
Looking forward to the peak Christmas trading period, Weston said Primark is “the best value store on the high street” for Christmas shopping and highlighted its range of Christmas jumpers, knitwear and licensed gifts on offer.
This comes after Primark reported surging profits and sales earlier today for the full year to September 14, 2024.
In comparison to Primark’s update was that of fast-fashion giant Asos, which reported sliding sales and profits for the full year.
Speaking about the Budget in a media conference call, Asos chief financial officer Dave Murray said the increased cost to the business from an employment perspective will only be “small” for Asos.
Murray said: “There is going to be a small increase in the cost that we’re going to have to pay our national insurance, but that’s nothing like how we manage other ups and downs through our cost base through the course of the year. Managing these costs is just something we have to face every year.
“It’s something that we are managing but it’s not a significant sum that we need to call out or make any changes in relation to guidance.”
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