The boss of Currys has warned Chancellor Rachel Reeves that further tax hikes will hurt growth and jobs as retailers are still reeling from her last Budget.
Chief executive Alex Baldock urged the Government to “think very carefully before they make the situation any worse.” Despite his caution, shares in Currys soared as he insisted the UK’s biggest electronics retailer could “swim against the tide.”
Labour claims
Baldock’s warning came as experts poured cold water on Labour’s claims to have fixed the economy since coming to power. Leading economists warned of the inevitability of tax rises after Keir Starmer’s welfare bill humiliation blew a £5 billion hole in the public finances.
“Recent policy decisions mean that in the absence of tax hikes or alternative spending cuts, fiscal rules would be broken in the autumn,” Bruna Skarica, chief UK economist at Morgan Stanley, said. “We think tax hikes look most likely.”
Currys cutting back
But Baldock warned that would result in fewer jobs, less investment and higher prices for consumers. He said Currys cut back on hiring after Reeves raised employer national insurance contributions and the minimum wage.
Baldock said: “We want to be helping to grow the economy and bring investment into the UK…. retailers would like to do it and would be able to do more of it with a more helpful policy environment. The tax burden retailers already suffer is dampening the contribution we could make, any further tax burden would further dampen growth, investment and employment and increase prices.”
The National Institute of Economic and Social Research (NIESR) spelled out the Chancellor’s predicament, saying she had sowed uncertainty with a prolonged gap between the election and her first Budget and an “erosion of confidence.” As public finance figures worsened, firms worried about further tax rises, making them reluctant to invest and hire.
Economic U-turns
And with U-turns—from winter fuel payments to welfare—as well as plans to hike defence spending, Reeves must find money from somewhere. Ben Caswell, economist at NIESR, said it was likely to mean “significant tax rises” with current policies “not sustainable.”
Currys yesterday reported annual profits of £162 million, 37 per cent up on a year earlier. Group revenue rose 3 per cent to £8.7 billion in the 12 months to May 3. UK sales were driven by demand for Currys’ mobile phone and computing businesses, while health and beauty products grew fast.
The recent heatwave has boosted sales of fans, air conditioning units and barbecues. The balance sheet is the strongest in a decade, with net cash of £184 million. Currys reinstated its dividend for the first time in two years as it proposed a payout of 1.5p per share. Shares closed 7.1 per cent, or 8.4p, higher at 126.9p.