Tesco CEO David Lewis says businesses, particularly in the physical world, face such a strong disadvantage from business rates that a job apocalypse is likely coming.
Lewis noted that the rates are “completely disproportionate” and the fact that they are created solely out of a link to physical property puts traditional retailers at a massive disadvantage.
“If the government is not careful, it is going to keep piling on the burden. Business rates are the single biggest tax Tesco pays – £700m a year.” Lewis said to The Guardian.
The problem Lewis noted is that sales are slumping just a prices are set to increase.
“There is a real risk that [this] will put pressure on employment in traditional retail,” he said.
Lewis’ remarks follow a document leak out of Tesco in February that indicated the firm is contemplating a massive run of layoffs that will leave 39,000 Tesco workers unemployed over the next three years. The employer of 300,000 in the U.K. cut thousands of jobs last year as a cost cutting measure, though there are no official plans for more reductions.
“We have to keep that under review depending on what happens in the budget [and the wider market],” he said.
And if it is a wider market he expects it will remains tough for the rest of the year.
“Not since the early 1970s has the U.K. market experienced any food deflation and we are now entering a third year of that. Nothing I see suggests that is going to change in the next year or so … Deflationary prices are good for customers but challenging for a business like ours and pressures from business rates and the living wages and new competitors,” he concluded.
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