Lidl GB boss Ryan McDonnell has promised that the discounter will “maintain market-leading pricing” despite the “greater inflationary pressures” from increases to employers’ National Insurance contributions.
The chief executive told PA News that the German discounter faces “tens of millions of pounds” in additional costs following the announcements made Chancellor Rachel Reeves in her first Budget last month.
Employers’ National Insurance contributions are set to rise from 13.8% to 15% on a worker’s earnings above £175 a week, effective April 2025.
McDonnell said: “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.
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“We are talking about £7bn for the whole industry. For us it will be somewhere in the tens of millions.”
It comes as Asda chairman Lord Stuart Rose said last week that the tax changes, which will cost the retailer around £100m, was “not an easy swallow”, while Sainsbury’s CEO Simon Roberts warned that the £140m extra piled onto its bill will lead to “some difficult decisions” as there “just isn’t the capacity to absorb all of this”.
Tesco is understood to be facing an extra £1bn added to its National Insurance bill over the next four years.
Earlier this week, a letter organised by the British Retail Consortium and signed by more than 70 companies including Tesco, Sainsbury’s, Asda and Morrisons, said that the National Insurance increase combined with a rise in the national minimum wage and new packaging levies could see the retail industry’s costs surge by up to £7bn a year.
It stated that the changes would make “job losses inevitable, and higher prices a certainty”.
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