Asda chairman Allan Leighton has called for a shift in government economic strategy, urging the Labour party to prioritize business growth over increased taxation in the upcoming Budget. Leighton stated that the Budget represents a "tipping point" where the government can "change tack and actually make growth happen" instead of continuing policies that he believes inhibit expansion.
Leighton's comments align with criticism from other business leaders, notably Mike Ashley, founder of Frasers Group. Ashley has strongly opposed plans, reportedly considered by Labour, to increase taxes on larger retailers to fund discounts for other businesses, such as pubs. Leighton described Ashley's remarks as "absolutely right," emphasizing that cumulative business cost increases have reduced profitability, thereby limiting investment capacity. "All of the things that have been the policy so far have added cost to, not just retail, across the piece," Leighton said, characterizing this as "economics 101."
The Asda chairman highlighted that the coming months are critical for consumer confidence, which will significantly influence the Christmas trading period and the broader economic outlook for the year.
Leighton's remarks come as he reported signs of a turnaround at Asda, the UK's third-largest grocer. The company saw a 0.2% increase in sales over the seven weeks leading up to August 18, marking the first return to growth in over two years. He described this as an "important milestone" and estimated the company to be "about a third" of the way through its recovery plan, which has involved price reductions and an online platform upgrade.
Despite this recent positive sales trend, Asda's financial results have shown challenges. For the three months ending in June, sales fell by 2.3%, resulting in revenue of £5.1 billion. Pre-tax losses widened to £989 million in the 2025 financial year from £599 million in 2024, with total sales declining by 3.4% to £25.9 billion. Leighton, who rejoined Asda in November 2024, has cautioned that the recovery is a long-term process and that price cuts will impact profits.
Addressing concerns about rising food prices, Leighton noted that the summer heatwave has affected crop yields globally. He stated that Asda is working closely with its thousands of producers and growers to ensure product availability and manage inflation. He also pointed out that Asda typically inflates prices below the market rate, which can be an advantage during periods of high inflation. Ultimately, however, he identified consumer sentiment and disposable income as the primary drivers of spending and economic activity.