The boss of Lidl has said retailers are “reeling” from autumn Budget tax increases, which he said will add to inflationary pressures at the grocery giant.
Ryan McDonnell, Lidl GB chief executive, said the discount supermarket chain is expecting to face “tens of millions of pounds” in extra costs as a result of a raft of changes launched by Chancellor Rachel Reeves last month.
Ms Reeves revealed a £25.7 billion change to employers’ national insurance contributions (NICs) in the Budget, which would increase the rate of the tax and reduce the threshold at which firms must pay.
We are talking about £7 billion for the whole industry. For us it will be somewhere in the tens of millions
Retail businesses will also come under pressure from other policy changes, including packaging levies and increases to the national minimum wage.
Lidl was among major retailers – also including Tesco, Asda and M&S – who warned the Chancellor that jobs will be cut and prices will have to rise as a result of the impact.
Mr McDonnell told the PA news agency: “There is a lot of impact that we will have to negotiate and I think the letter shows that the industry is reeling a lot.
“We are talking about £7 billion for the whole industry. For us it will be somewhere in the tens of millions.”
He said that the jump in costs will result in “greater inflationary pressures” but stressed that it will “maintain market-leading pricing”.
It came as Lidl revealed a surge in sales for the past year as the German discounter saw a raft of shoppers switch from rivals amid pressure on household budgets.
New accounts showed that Lidl GB revenues increased by 16.9% to £10.9 billion for the year to February.
Meanwhile, it also swung to a pre-tax profit of £43.6 million for the year, after posting a loss of £76 million a year earlier.
The retailer, which first launched in the UK 30 years ago, has expanded to run more than 960 stores.
It is now the UK’s sixth-largest grocery chain and has continued to increase its share of the market in recent months, according to data from Kantar.
The supermarket group said it has benefited from a continued store expansion programme, with plans to open 18 more stores in the “next few months”.
It said it plans to follow this with 40 more openings in the next financial year and “hundreds more after that”.
Mr McDonnell said: “Now, 60% of households are choosing to shop at Lidl, and they’re coming back more frequently, which is a fantastic sign of increasing loyalty.
“We have great momentum and, although our ambitions have no ceiling, we won’t rest on our laurels.
“We’ve been laying the foundations for further growth whilst creating an even better store experience for shoppers.”
