Tesco to cut extra £500m in costs to offset tax increase

Tesco said yesterday it planned to cut a further £500m in costs as it tried to cushion the blow of Rachel Reeves' tax rises and invest in fighting a price war with supermarket rivals.

- Kalyeena Makortoff

Britain's biggest grocery retailer said it was deepening an existing drive to cut costs to help offset higher operating costs, as well as the £235m rises in its national insurance contributions (NICs) as a result of changes made by the chancellor.

The retailer announced the cost cuts as it reported a fall in annual profits, and said profits would be lower this year as a fight with rivals for shoppers intensifies. The update sent shares sharply down despite a rise in the wider FTSE 100 in response to Donald Trump's U-turn on tariffs.

Tesco was among retailers to have warned that the rise in employer NICs - announced in Reeves's autumn budget - would lead to job cuts and higher prices.