Asda chairman Allan Leighton has warned the government that its upcoming October Budget marks a critical tipping point for British business growth.
Leighton urged Ministers to abandon heavy high street tax increases and backed retail tycoon Mike Ashley in opposing proposals to raise business rates on larger companies.
The comments from the supermarket chief come as business leaders set out their cases to ministers ahead of the Treasury's financial announcement, while Leighton disclosed initial signs of a turnaround at Britain's third largest grocer.
Leighton argued that the Budget offers an opportunity for the new Prime Minister and Chancellor to shift away from heavy business taxation toward policies that enhance commercial expansion.
"This is a real tipping point: instead of just talking about growth, the government now has an opportunity to change tack and actually make growth happen," Leighton said.
He added that the coming two months are critical for the economy because consumer confidence following summer holidays will set the scene for the rest of the year, including the essential Christmas trading period.
High Street Tax Proposals and Business Rates
Leighton threw his support behind scathing remarks made earlier this week by Sports Direct tycoon Mike Ashley regarding plans put forward by Andy Burnham to revive local high streets.
Burnham insisted this week that he would take pressure off struggling firms that have faced soaring operating costs and reduced customer spending power in recent years.
His proposal includes funding business rates discounts for local pubs and clubs by increasing business rates on online retail warehouses, alongside imposing tougher rules for vape and betting shops.
However, Ashley, whose retail empire encompasses House of Fraser, Flannels, Sofa.com, Jack Wills, and Evans Cycles, warned that taxing larger retailers more to subsidize other businesses would be disastrous.
Ashley described raising business rates further on major retailers as simply delusional, pointing to a disastrous approach to property taxes and the dramatically increasing cost of employing people as the primary obstacles for British enterprise.
Leighton agreed that Ashley's comments were absolutely right, criticizing recent policy decisions for adding operational expenses across the entire retail sector.
"All of the things that have been the policy so far have added cost to, not just retail, across the piece," Leighton said. "And then that has reduced the profitability of those organisations, and therefore they've got less money to invest in growth. It's economics 101."
Financial Turnaround and Sales Performance at Asda
The policy warning coincided with Leighton hailing the early signs of a recovery at Leeds-based Asda, which has suffered from falling sales following its acquisition by a private equity firm several years ago.
Sales at the supermarket chain rose by 0.2 per cent over the seven weeks to 18 August, marking Asda's first return to quarterly sales growth in more than two years.
Leighton called the result an important milestone, estimating that the grocer is currently about a third of the way through a turnaround strategy focused on price cuts and a comprehensive online system upgrade.
Despite the recent seven-week uptick, Asda reported that sales fell 2.3 per cent during the three months to the end of June, generating total revenue of £5.1 billion.
"I see this really as the sort of foothills of recovery still, but also the foothills of possibility," Leighton remarked.
Company accounts published earlier this year showed that pre-tax losses at Asda widened from £599 million in 2024 to £989 million in 2025, as total annual sales dropped 3.4 per cent to £25.9 billion.
Leighton, who rejoined the supermarket operator in November 2024, cautioned that his strategic recovery plan would not produce an overnight fix and acknowledged that price reductions would continue to weigh on short-term profits.
Supply Chain Inflation and Consumer Sentiment
In addition to tax pressures, Leighton warned that summer weather conditions have created supply chain challenges that could influence food prices.
"The crops are in a tricky state, not just in the UK, everywhere, you know clearly and it's more a produce issue than anything else," he explained, citing the impact of summer heatwaves on agricultural yields.
He stated that Asda is working closely with its thousands of producers and growers to maintain store inventory levels and manage food price inflation as effectively as possible.
"We generally inflate below the market anyway, so generally when there's high inflation, that's quite a good thing for us," Leighton added, noting that competitive pricing offers an advantage during inflationary periods.
Ultimately, Leighton stressed that broader economic recovery depends on customer confidence and willingness to spend in stores.
"But the biggest thing is consumer sentiment. How do people feel? Do they feel as if they want to spend? Do they have the money to spend? That's always been the driver of it," Leighton concluded.
