CEOs are said to have vented their fury at the Budget on a call with the Business Secretary

Daily Business News

Business leaders have vented their fury at the Budget in a phone call with Business Secretary Jonathan Reynolds yesterday, Sky News claims. Pub group Fuller, Smith & Turner is said to have warned it will be forced to halve annual investment from £60m to £30m because of increased cost pressures, and the British Beer & Pub Association also warned other businesses would now be disinclined to invest, flagging "a tsunami" of higher costs. An insider at the meeting said Greene King CEO Nick Mackenzie highlighted how the increase in employers' national insurance (NI) contributions would cause "a £20m shock" to his company, and Rami Baitieh, Morrisons CEO, also told Reynolds the Budget has exacerbated "an avalanche of costs" for businesses next year. Baitiieh is also said to have asked what the Government is going to do to mitigate them? The Confederation of British Industry (CBI) warned the impact of the Budget would be "severe," and others on the call are said to have expressed concern that they now have no choice but to slash investment and increase prices. Reynolds is said to have acknowledged the Chancellor’s inaugural fiscal statement had "asked a lot" of British business, and James Murray, the financial secretary to the Treasury, is understood to have atttempted to downplay concerns by describing it as "a once-in-a-generation budget", according to several people briefed on the call. Few were in support of measures announced last week, the Federation of Small Businesses (FSB) being one exception. The FSB is reported to have praised the doubling of the employment allowance, which will see many of the smallest employers having their NI bills cut by £2,000. None of the companies contacted by Sky News would comment on the veracity of the claims made about their comments.

Will supermarkets have to put up prices in the wake of last week’s Budget? According to Sky News, the answer is ‘yes,’ because the grocery industry will be among the hardest-hit by the 1.2% increase in employer National Insurance contributions (NICs), and the fact the threshold at which it becomes payable is being reduced to a salary of just £5,000. Sky understands that Marks & Spencer (M&S) and J Sainsbury are collectively facing an additional bill of close to £200m as a result of the changes.  They also face a wage bill rise because of the increase to the national living wage. Industry sources told the newscaster the pressure on pricing would be "intense" given the thin margins on which the big supermarkets already operate. "Food price increases from next April are inevitable," said one. They also said the supermarkets are considering whether to explicitly blame the Government for higher prices at the checkout, a move “which will trigger renewed inflation in the UK economy,” City editor Mark Kleinman writes. Chancellor Rachel Reeves is hoping to raise an extra £25bn a year from the tax hikes to employer NICs. Prior to the budget, M&C CEO Stuart Machin said: "When I hear about plans to increase national insurance, a tax with no link to profit which hits bigger employers like us and our smaller suppliers, I'm concerned”. “The chancellor was right in the past to call national insurance a tax on workers."

Three quarters of food produced by British farmers will be impacted the Chancellor’s Inheritance Tax raid on family farms, Tom Bradshaw, CEO of the National Farmers’ Union (NFU) says. The NFU estimates “75% of the total farmed area” will be subject to death duties, negating claims by Rachel Reeves that only a quarter of farmers will be hit by the new 20% levy on farms worth over £1m. “It’s then logical to assume that they are producing 75% of the food associated with them. So there is a significant amount of the food production of this country that is within scope of these changes,” and the Government has “not considered at all the impact on food production,” Bradshaw added. The NFU also pointed to separate Defra data suggesting a majority of farms would face an inheritance tax bill if handed down within the family under Reeves’ new tax regimen. The fact she claims only a “small number” of farms will be affected, “shows how little this Government understands the sector,” Bradshaw commented. “Very few viable farms would be worth under £1m, but lots of smallholdings and houses with a few acres let for grazing might be. The asset value of genuine food-producing farms will be high, given the size they need to be to remain viable businesses; but that’s the value of the asset, it doesn’t reflect its profitability which is often, and increasingly so, very low.” He also said farmers would be put off making improvements to their businesses because any investment “will now increase your balance sheet and you’ll be liable to pay inheritance tax”. In a statement, the NFU also raised the likelihood that those who inherit land could be forced to sell some of it to pay taxes due, potentially reducing the amount of land available for food production in the UK. Almost 500 inherited farms were valued above £1m in the 2021-22 tax year, according to HMRC data, meaning they would have been liable for tax under the new rules.

Britain’s largest banks could have their credit ratings downgraded because of an Appeal Court ruling on motor finance commission payments, which could lead to them having to pay extensive compensation to motorists, Fitch, the influential credit rating agency, warns. Last week, the Appeal Court found motor dealer bonuses paid by banks were unlawful, opening the door to potentially huge compensation claims, well in excess of those involved in the PPI scandal. Fitch said: “UK banks’ profitability has strengthened in recent years, supported by higher interest rates and contained impairment costs. However, more ratings could come under pressure if remediation costs affect earnings, capital ratios and business growth prospects over a prolonged period.” Barclays, Lloyds and Santander were named in the Fitch warning, although it stressed their ratings were “not immediately affected”. All three currently have an “A” rating for their credit quality. Specialist lenders Bank of Ireland, Investec Bank, Paragon and FirstRand were also included. On Friday last week, Fitch put Close Brothers, one of the biggest lenders in the motor finance sector on a “negative” ratings watch because of the lender’s high exposure to motor finance risk.

House prices are set to grow almost twice the rate of inflation over the next five years according to the latest residential forecast from property firm JLL, which predicts rises of 20% between now and 2029. That outpaces a 11.6% rise in the Consumer Price Index as predicted over the same period by the Office for Budget Responsibility (OBR), and the 14% increase in wages predicted by Oxford Economics. The news will come as “a blow to Sir Keir Starmer’s ambitions to boost the number of affordable homes,” the Telegraph’s Property Correspondent Pui-Guan Man writes. Labour has pledged to build 1.5m more homes by the end of this Parliament. Rents are also forecast to grow more quickly than wages, increasing by 17% by 2029 according to JLL.

Shoplifting is at "unacceptable" levels; not being tackled properly, and police forces need to take "immediate action," an inquiry by the House of Lords Justice and Home Affairs Committee has concluded. The report also says retailers must be able to report crimes more easily; more funding should be found for offender rehabilitation; and additional regulation should be introduced to make it more difficult to sell stolen goods anonymously online. The committee has drafted its report after hearing evidence from police chiefs, retailers and industry experts. It heard more than 443,000 incidents of shop theft were recorded by police in March 2024, the highest number since records began 20 years ago. However, this figure is "a drop in the ocean" compared with likely real figures, the committee said. These are estimated at 17m annually, a number which it warned has "devastating consequences for businesses and families".

Retail sales dipped in October because of pre-Budget anxiety, according to the British Retail Consortium (BRC)-KPMG sales monitor. Sales increased by 0.6% year-on-year in October, compared to 2.6% growth in October 2023. Food sales also slowed: they were up only 2.9% year on year - compared with growth of 7.9% last October - below the 12-month average growth of 4.1 %.

The merger between Vodafone and Three appears more likely to go ahead now, because the Competition and Markets Authority (CMA) has suggested upgrading the merged company’s network across the UK - including the roll-out of 5G - as well as some short-term customer protections, as possible remedies which will allow the merger to get the green light. Previously, the CMA warned the deal was likely to lead to price increases for tens of millions of mobile customers, as well as lead to reduced services, for example, smaller data packages in their contracts. Stuart McIntosh, chair of the CMA inquiry group leading the investigation, now says: “We believe this deal has the potential to be pro-competitive for the UK mobile sector if our concerns are addressed”.  A decision will be made by 7^th December.

Former Conservative Chancellor Nadhim Zahawi is said by Sky News to be working actively with New York-based media investor Dovid Efune in his bid to take over The Daily Telegraph. Zahawi is working alongside LionTree, Efune's investment banking advisor and, in particular, is said to be exploring securing a portion of the funds needed to buy the newspaper and its Sunday sister title from former Tory treasurer Sir Mohamed Mansour. Mansour is apparently considering putting £150m into the estimated £575m required for the purchase. The Spectator was sold recently £100m to Sir Paul Marshall, the hedge fund billionaire who also backs GB News. Marshall has made former Cabinet Minister Michael Gove its editor. Insiders told Sky Zahawi was likely to be given a role at the Telegraph if Efune’s bid is successful. Efune has a period of exclusivity to finalise the deal by the end of November.

Shares in asset manager Schroders have plunged as much as 14.1% this morning after the firm warned clients had pulled a net £2.3bn from the fund in the three months to September amid fears about an economic slowdown in China. The dip has wiped nearly £829m off the FTSE 100 company’s value.  Schroders also warned it expects some £8bn of outflows in the current quarter from a legacy mandate with Scottish Widows, as well as a further losses from three institutional clients of about £2bn.

Burberry could be a takeover target for Italian outerwear brand Moncler, according to specialist fashion site Miss Tweed, which claimed that LVMH head Bernard Arnault is “keen” to get a deal done with the British luxury goods retailer, citing several industry sources. LVMH bought a 10% stake in Double R, the investment vehicle controlled by Moncler CEO Remo Ruffini’s Ruffini Partecipazioni Holding, in September. Double R has a 15.8% stake in Moncler, and the deal gave LVMH a seat on the Italian company’s board. Burberry has struggled this year. Its poor performance on the FTSE 100 meant it dropped out of the blue chip index, making it a prime takeover target. Moncler told the Guardian it did not comment on “unsubstantiated rumours”. Burberry and LVMH have declined to comment at all.

Primark owner Associated British Foods posted a 33% jump in full-year adjusted pre-tax profit this morning, reporting revenue growth in both its retail and food businesses. In the 52 weeks to 14^th September, adjusted pre-tax profit rose to £1.96n from £1.47bn a year earlier, with group revenue up 2% at £20bn. Adjusted operating profit was 32% higher at just under £2bn. Retail revenue grew 6% during the year to £9.4bn, attributed to strong performance across its key growth markets, including the US, France, Spain, Italy and Central and Eastern Europe, as well as growth in its largest market, the UK.

In the US, Boeing workers have voted to end to seven weeks of strikes, accepting a 38% pay rise. The International Association of Machinists and Aerospace Workers union said 59% of voting members in its Seattle district approved Boeing’s fourth offer. Assembly lines at Boeing’s Pacific Northwest factories have been idle for 53 days because of the walkouts.