Andy Burnham’s first Budget in October could be a “tipping point” for British businesses and the economy, the chair of supermarket giant Asda has warned.
The country faces a critical moment that will shape consumer confidence for months to come.
Allan Leighton, who is attempting to push through a turnaround of the grocer, said it is “too early to tell” whether the government is committed to halting the rise of taxes facing the UK’s businesses but warned the Prime Minister he must not “inhibit growth”.
“The model so far has been to inhibit growth, which is high taxation of consumers, relatively high taxation and lots of costs being piled on business, and [with] those two things you’ll never grow,” he told City AM.
Mr Leighton added that the Budget would prove decisive for the direction of the country.
“We can either inhibit growth, which has been the strategy so far, not inhibit growth, which in itself would be something, or thirdly, do something that really helps growth,” he said.
The Asda chairman threw his weight behind Frasers Group founder Mike Ashley, who on Thursday accused Mr Burnham of pursuing “populist” policies rather than tackling the structural problems holding back the economy.
Mr Ashley’s letter to the Prime Minister branded the government’s position on business rates “disastrous” and called for an end to ever-increasing regulation.
Mr Leighton said Mr Ashley’s intervention was “absolutely right” and that reforming business rates would make a “big difference” for firms across the country.
“All of the things that have been the policy so far have added cost to, not just retail, across the piece,” he said.
Retailers have been pressing Labour to honour its manifesto commitment to “replace” the business rates system
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ASDA“And then that has reduced the profitability of those organisations, and therefore they’ve got less money to invest in growth. It’s economics 101.”
Retailers have been pressing Labour to honour its manifesto commitment to “replace” the business rates system. However, Mr Burnham this week announced a review covering only pubs and hotels.
The Prime Minister has insisted he would “take pressure off” businesses, which have seen operating costs surge while consumers have less money in their pockets.
Mr Ashley, whose retail empire spans House of Fraser, Flannels and Evans Cycles among others, wrote that raising rates further on larger retailers to subsidise discounts for other businesses would be “simply delusional”.
Mr Leighton added that the Budget would prove decisive for the direction of the country
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GETTY“Rather than address the real underlying issues of how the country’s financial affairs are managed […] it is easier for you to pick topics which provide good media soundbites,” he told Mr Burnham.
The warning came as Mr Leighton revealed that Asda had returned to sales growth for the first time in more than two years. Like-for-like sales excluding fuel rose 0.2 per cent during the seven weeks to 18 August.
Mr Leighton called the milestone “important” but cautioned against premature celebration. “I see this really as the sort of foothills of recovery still, but also the foothills of possibility,” he said.
The privately owned supermarket chain posted a 2.3 per cent decline in sales over the three months to the end of June, generating revenue of £5.1bn. For the full year to December 2025, Asda reported pre-tax losses of £989m.
Mr Leighton expects the turnaround to take between three and five years, noting that his previous transformation of Asda in the 1990s required four. He described the grocer as roughly “a third” of the way through its recovery, which has involved cutting prices and overhauling its online operations.
The appointment of a new chief executive is “not imminent”, with Mr Leighton saying his preference would be to promote from within the existing leadership team.
He also flagged rising food prices as a concern, warning that this summer’s heatwave had left crops “in a tricky state” across the UK and beyond, with fresh produce likely to be worst affected.