Tesco to slash additional costs by £500m as tax burden mounts.

Tesco to Cut Further £500m in Costs Amid Rising Tax Burden

Britain‘s largest grocery retailer, Tesco, has announced plans to slash a further £500m in costs as the supermarket chain tries to offset higher operating costs and invest in fighting a price war with rivals. The move comes after the government increased national insurance contributions (NICs) by 1.8%, affecting retailers across the sector.

Impact of Tax Increases on Retailers

Tesco’s decision to cut costs is part of an existing drive to reduce expenses, which was first announced last year. The retailer has been warning that the rise in employer NICs would lead to job cuts and higher prices. Other retailers have also been affected by the tax increases, with some estimating a combined £2.3bn bill from the change.

Tesco’s Response to Rising Competition

Tesco is forecasting lower profit for the year amid a growing price war with rival supermarkets. The company has reported falling annual profits, but it has increased its market share across the UK to 28.3%, its highest point since 2016. Despite this, Tesco says it is committed to ensuring customers get the best value in the market and sees further opportunities to protect and strengthen its competitiveness.

Cost-Cutting Measures

Ken Murphy, Tesco’s chief executive, said that while cost-cutting measures might put jobs at risk, he believes the company is using those savings to drive growth. The retailer has ended the financial year with more people employed than it started, allowing for growth and increased opportunities. However, Mr. Murphy acknowledges that job cuts are not ruled out entirely.

Market Conditions

The UK supermarket market has been experiencing a price war, which has already wiped billions off stock market values in recent months. Tesco’s decision to cut costs further is part of its strategy to respond to current market conditions and protect its competitiveness.