Tesco and M&S Plan Sweeping Cuts in Response to Reeves Tax Increases

Tesco and Marks & Spencer plan to slash costs to cushion the blow from Rachel Reeves's tax increases, the retailers said, as they posted strong Christmas trading.

- Sarah Butler

The retail chains said they were grappling with the impact of increases to wage payments announced by the chancellor in her debut budget in October, and would attempt to slash costs in response.

Tesco confirmed speculation that increases to employers' national insurance contributions announced in the budget would add £250m a year to its costs, while M&S has said the changes, being implemented in April, would add £60m to its costs, about half of the total rise in its wage bill.

In a statement to investors, M&S said: "The external environment remains challenging. As we enter the new year, the outlook for economic growth, inflation and interest rates is uncertain and the business faces higher costs from well-documented increases in taxation."

Stuart Machin, the chief executive, said: "It is going to be a challenge for us but I do not see in M&S big job losses as we are a growing business."