The boss of Primark said the “weight of tax rises” in the autumn Budget has fallen on the high street, as he hinted that it could prompt the retailer to direct investment outside the UK.
George Weston, the chief executive of Associated British Foods, which owns Primark alongside food and sugar brands, said it was preparing for a big jump in business costs.
Last week, Chancellor Rachel Reeves unveiled her first Budget which she said met the Government’s promise not to increase taxes for “working people”.
But she introduced measures including an increase to the rate of employer national insurance from April next year.
It's quite clear to me that this a Budget where the weight of the tax rises are falling on business - within that, it's fallen particularly on the high street
Mr Weston said that change means the national insurance bill for AB Foods will “go up by tens of millions”.
“We’re an international business as well, we have choices about where we will invest,” he told the PA news agency.
AB Foods operates in 56 countries around the world, with Primark recently launching its first US marketing campaign in New York in a bid to attract more American shoppers.
“We undoubtedly have significant increases in costs that we are facing. It is not a surprise, the money had to come from somewhere.”
The boss added: “It’s quite clear to me that this a Budget where the weight of the tax rises are falling on business – within that, it’s fallen particularly on the high street.”
The remarks come after AB Foods reported £1.1 billion in operating profits at Primark for the year to September 14, which was 53% higher than the previous year.
In the UK, sales rose 1% year on year, with poor weather in April and June knocking demand for summer clothing.
Mr Weston said there was an “unwillingness to spend in advance of needing something” among consumers, reflecting a caution that has been prevalent since the cost-of-living crisis.
But wage growth, along with a Budget that was not too impactful for household incomes, should bolster spending going into the Christmas season, he said.
The chief executive also revealed that the group was continuing to face pressure across its supply chain, with ongoing disruption to trade routes along the Red Sea and protesting in Bangladesh.
But he stressed that Primark has “no intention” of raising prices throughout the rest of the year.
