News Story

Chancellor Rachel Reeves has come under pressure over rising costs for businesses as Currys, JD Wetherspoon and Morrisons laid bare the impact of tax hikes and policy measures.

Pub group JD Wetherspoon warned over profits as it revealed a £45 million hit in its first half from surging costs including energy, wages and business rates.

It said profits in the first half are “likely to be lower” year-on-year, with the annual trading result also set to come in below the previous year, as rising costs took the shine off otherwise robust Christmas trading at the 800-strong pub chain.

Electronics retailer Currys also took aim at government policies as it unveiled its Christmas trading figures, warning that painful cost increases for businesses and the upcoming Employment Rights Bill were hurting hiring across the sector and wider growth in the economy.

Supermarket Morrisons added to the costs gloom, revealing that measures in the 2024 budget, such as last April’s national insurance contributions tax hike and minimum wage rise, sent its costs surging by £200 million in its past financial year.

It is slashing costs to offset the higher bills, adding it was not replacing some workers when they left in order to make savings.

The most recent autumn budget has added to these costs for many firms, with another significant minimum wage rise and a jump in business rates bills, which is set to knock pubs and hospitality firms particularly hard.

Shadow chancellor Sir Mel Stride said Labour’s policies were “costing Britain jobs”.

He said: “Businesses couldn’t be clearer: Labour’s tax-and-spend agenda is already costing Britain jobs.

“When you punish employers, you punish workers and working people are paying the price.”

Ms Reeves insisted businesses were feeling “optimistic” despite mounting signs of the impact of tax hikes and cost pressures.

Speaking at the World Economic Forum in Davos, Switzerland, she told Sky News: “Businesses here, this week are feeling positive.

“They’re feeling optimistic about the year ahead.

“I am too, because we have the right plan, for our economy, for our country to bring that growth and prosperity in all parts of the country that we need.”

Currys boss Alex Baldock said the retail sector was hit with a £7 billion cost hike after the November 2024 budget.

Mr Baldock said: “If you put costs of that scale into the system, they (businesses) don’t have anywhere to go.

“You have to be quite careful about loading more costs and red tape onto businesses because that is ultimately going to feed through into higher prices, lower investment, fewer jobs and lower growth.”

It comes after it emerged earlier this week that the firm that handles customer support for Currys is looking at plans to offshore jobs to India and South Africa.

Outsourcing firm Concentrix is now in consultation with impacted staff.

Mr Baldock told Times Radio on Wednesday that “offshoring and outsourcing was inevitable” in the face of rising wage costs and red tape for employers.

Morrisons chief executive Rami Baitieh made a plea to the Government over costs as he said it was impacting firms across the retail sector and having a knock-on effect on shopper confidence.

“I say please, no more,” he said.

“It’s very important for us, for consumers, for everyone.”

Elsewhere, manufacturers also cautioned that rising costs were impacting the sector and leading to price hikes.

A survey of manufacturing firms by the CBI business body showed declines in output picked up pace in the three months to December.

Ben Jones, senior lead economist at the CBI, said firms in the sector were “finding conditions extremely tough”.

“The Government must now focus on lowering the cost of doing business to unlock investment and growth,” he said.