Allan Leighton, the chair of Asda, has voiced grave concerns regarding the Labour Party’s approach to supporting British businesses, labelling the current environment as increasingly challenging for firms. Speaking at the Retail Week x The Grocer conference, Leighton reflected on his past experience as CEO in the 1990s, contrasting it with today’s political landscape where he feels government engagement with businesses has significantly diminished.
Deteriorating Government-Business Relations
Leighton, who has held the chair position at Asda since 2024 and previously served as its chief executive, emphasised that the dynamic between the government and businesses has soured over the years. “When I was last running the company, the government made concerted efforts to engage with us,” he remarked. “Now, it seems to be more difficult and less supportive.” He underscored that the ramifications of decisions made in Westminster are increasingly felt by companies, often exacerbating their operational challenges.
The supermarket executive’s comments echo a growing sentiment among industry leaders, as Tesco’s chief, Ashwin Prasad, recently warned that Labour risks “sleepwalking” into a crisis of unemployment. Leighton further articulated that businesses today face numerous constraints largely stemming from governmental actions, stating, “We are left to tackle issues not of our own making.”
Rising Operational Costs and New Regulations
Asda, the UK’s fourth-largest supermarket chain, is grappling with mounting pressures, including increased hiring costs due to a rise in the minimum wage and escalating National Insurance contributions. Additionally, businesses are contending with heightened costs related to packaging and energy. The introduction of new workers’ rights legislation could amplify these burdens.
Despite acknowledging these challenges, Leighton conveyed a resilient attitude, maintaining that businesses must adapt to the evolving landscape. “I don’t complain about it; we just have to deal with it,” he asserted.
Shevaun Haviland, director general of the British Chambers of Commerce (BCC), echoed these concerns following Chancellor Rachel Reeves’ recent spring statement. Haviland called for the government to implement more robust measures to stimulate economic growth, noting that while the UK economy is heading in the right direction, the pace of recovery is insufficient. “With GDP growth projected to be below 2% until 2030 and unemployment expected to rise soon, further action is essential,” she remarked.
The Broader Economic Context
Haviland also cautioned that the government must prepare for potential repercussions stemming from ongoing conflicts in the Middle East, which could disrupt commodity supplies and drive prices higher. “The current inflation forecasts do not reflect the risks associated with escalating tensions in the region, which could add further uncertainty to prices and public finances,” she noted.
Recent research from the BCC indicates that optimism among businesses is on the rise, with nearly half expressing intentions to expand in the upcoming year, a notable increase from a third in 2025. To realise this potential, the government needs to focus on enhancing exports, boosting regional investments, and improving productivity, according to Haviland.
Asda’s Path Forward
Despite facing a decline in year-on-year sales—making Asda the only major supermarket to report such a downturn—Leighton is optimistic about the future. He anticipates that the turnaround will take time, estimating a timeframe of three to five years for significant progress. “I’m looking for signs of improvement, and I believe they are beginning to emerge,” he commented, hinting at plans to promote a new chief executive from within the existing team.
Leighton, who has held various leadership roles across different sectors since his first tenure at Asda in the late 1990s, remains committed to steering the supermarket towards recovery.
Why it Matters
The ongoing dialogue about the relationship between government and business is crucial, particularly in a time when economic stability is paramount. Leighton’s critique of Labour reflects broader concerns within the business community regarding governmental support and policy direction. As companies navigate rising operational costs and regulatory changes, the need for a constructive partnership between the government and businesses becomes ever more pressing. The outcome of this relationship will significantly influence the UK’s economic trajectory in the coming years, impacting job creation, investment, and overall prosperity.
