Rishi Sunak must come up with a long-term growth plan to ensure the UK economy recovers from the cost of living crisis, the chair of Tesco has said.
“The reality is many people in this country are suffering through this cost of living crisis,” said John Allan, who also chairs Barratt, Britain’s biggest housebuilder. “What we’d love to see from the government is a really serious, thought-through, long-term growth plan.”
The government, which was criticised by the billionaire Sir James Dyson for its “anti-growth” tax policies earlier this week, is coming under pressure to announce measures in the March spring budget to avoid a long-term recession and tackle the biggest drop in living standards since the 1950s.
However, Allan said that while tax cuts – which the chancellor, Jeremy Hunt, has indicated are not on the cards in the “slimmed-down” budget on 15 March – would “possibly” help, a longer-term plan was essential.
“There is nothing that is irretrievable about the UK economy,” he said, speaking on BBC Radio 4’s Today programme on Friday. “I am an optimist in the long term but in the short-term we have some issues. Those issues are having an impact on investment. Long-term growth is the only way which we are actually going to be able to raise standards of living for our fellow citizens.”
Allan expects the headline rate of annual inflation, which dipped again last month to 10.5%, to drop throughout the year but does not expect it to return to the low single-digit levels the UK has enjoyed in recent years until “2024 and beyond”. The Bank of England’s official inflation target is 2%.
Annual food inflation soared by 16.8% in the year to December, the biggest annual jump since 1977, according to the Office for National Statistics.
“There has been a dramatic escalation,” Allan said. “Our hope is inflation will start to reduce by the middle of the year and be somewhat lower at year end. But it doesn’t mean prices are going to fall. The increase in prices, we hope, will be much less sharp in the second half of this year.”