B&Q owner Kingfisher has said that uncertainty around the UK government’s budget hit consumer spending, and it will pay an extra £31m in taxes after Rachel Reeves’s rise in national insurance.
The DIY and building supplies retailer said that it had seen “solid underlying trading in August and September”, but that changed to a “weak market and consumer in the UK and France in October, affected by uncertainty related to government budgets in both countries”.
The new Labour government raised taxes in order to pay for higher spending at the budget at the end of October. Reeves, the chancellor, raised employer national insurance contributions (NICs) in particular as the kmain £25bn fundraising measure.
Reeves targeted businesses so that she could claim to have stuck to her promise not to raise taxes on “working people”. However, the budget sparked a chorus of disapproval from large sections of industry, who warned the NICs increase would lead to higher prices and job cuts.
Kingfisher said the cost of the national insurance increase would come to £31m in its financial year to the end of January, while the equivalent tax rises in France would cost it £14m. The company said it was seeking to “mitigate” those costs, although it did not say how.
The Bakery chain Greggs on Monday separately said that changes to NICs thresholds would hit it particularly hard, costing tens of millions of pounds, as the company employs 32,000 people in the UK.
However, the chief executive, Roisin Currie, said that the budget would not prevent it from investing and any customer price rises likely to only be “pennies”.
For B&Q, budget uncertainty contributed to falling sales. The company said in a trading update on Monday that sales fell by 1.1% in the three months to the end of October compared with a year earlier to £936m. It also blamed “wetter and milder than normal” October weather, which it said had prevented shoppers from carrying out home maintenance.
However, the group’s overall UK sales rose by 1.2% , helped by a 4.6% sales increase at its Screwfix brand, which caters more to tradespeople, to £681m.
after newsletter promotion
Thierry Garnier, the Kingfisher chief executive, said: “Improved performance in August and September was offset by the impact of increased consumer uncertainty in the UK and France in October, related to government budgets in both countries.”
Kingfisher owns the Castorama and Brico Dépôt brands in France, which together made sales of £967m in the quarter, down 6.4% year on year. The French minority government led by Michel Barnier last month imposed a budget of spending cuts and tax increases.
Later on Monday, Reeves will seek to defend the budget to business leaders attending the annual conference of the Confederation of British Industry (CBI), the lobby group. She is expected to say that the UK has “no alternative” but to raise taxes on business “to fix the NHS and rebuild Britain”.
