Key facts
- Asda chair Allan Leighton warned the upcoming October budget could be a 'tipping point' for the UK economy.
- Leighton criticized current economic strategies for inhibiting growth through high consumer taxation and business costs.
- Prime Minister Andy Burnham pledged to ease concerns over tax hikes and tackle the 'cost of business'.
- Burnham indicated potential for lowering trade barriers with the EU and boosting trade relations.
- Asda has recently returned to sales growth after a significant pre-tax loss.
Asda chair Allan Leighton has cautioned that Prime Minister Andy Burnham's upcoming October budget could represent a critical "tipping point" for the British economy. Leighton expressed concern that current economic strategies, characterized by high taxation on consumers and increased costs for businesses, are inhibiting growth.
Leighton stated that it is "too early to tell" if the government is committed to supporting business growth, emphasizing that the budget will be a crucial moment for consumer confidence and national economic expansion. He has previously been critical of governments for making dealings with businesses more difficult and less supportive.
These sentiments echo a recent intervention by Mike Ashley, founder of Frasers Group, who accused Burnham of prioritizing "populist" policies over essential long-term economic solutions. Ashley specifically criticized Burnham's approach to business rates, a tax that Leighton also believes requires reform to significantly benefit British firms. While retailers have called for a replacement of the business rates system, Burnham recently announced a review focused only on pubs and hotels.
Prime Minister Andy Burnham has pledged to help tackle the “cost of business” as he looks to head off fears that the private sector will be hit with another punishing tax raid at the Budget. Burnham said he wants to “make life easier” for people and businesses as he prepares for his first Budget under the new government. In an interview on Wednesday, the Prime Minister said the fiscal problems facing the government were “challenging” but he was taking steps to ease the pressure on both households and the private sector.
Burnham also tried to ease worries among investors and business owners that a series of tax hikes were coming at the Budget. The Prime Minister said he was “acutely conscious of how hard the operating environment is for businesses, big and small”. His comments reflect growing concerns from the private sector that the government could again lean on the private sector at the Budget in order to raise revenue. Research by the British Chambers of Commerce suggests that government policies over the last decade have pushed up costs on businesses by about 70 per cent.
Burnham also appeared to signal that a trade summit with the European Union was set to take place in November. He echoed his predecessor in suggesting that boosting trade with the economic bloc would “add percentage points” to the UK growth rate. Burnham said relations with the EU were an issue that “we cannot ignore”.
The new Prime Minister also told the Financial Times that his focus on boosting “public control” over utilities such as water and energy were partially a way to show he did not “necessarily” back full nationalisation. “It’s about making the basics function properly and function properly for business, so you create the most benign investment environment for companies,” he said.
Leighton, who returned to Asda in November 2024, is undertaking a turnaround of the supermarket. He expressed confidence in restoring the business, estimating the process will take three to five years. Asda has recently shown signs of recovery, returning to sales growth for the first time in over two years in the seven weeks leading up to mid-August. The company reported a pre-tax loss of £989 million for the year ending December 2025, though its debt pile decreased from £4.1 billion to £3.5 billion. Leighton noted that the appointment of a new chief executive is not imminent, with a preference for an internal candidate to emerge.