Shore Capital Markets’ retail guru Clive Black has pulled no punches in his latest assessment of the UK’s foods and drink sector's prospects under Labour chancellor Rachel Reeves’ economic vision.
Black sharply criticised the recent Budget, calling it "a car crash" and accusing the government of being "naive, duplicitous, ideological, and stupid".
In a research note, Black highlighted that elevated costs stemming from National Insurance Contributions (NIC), National Living Wage awards and other regulatory measures are likely to push food inflation higher, impacting grocery prices and “a potential step up” in unemployment.
The tax-laden Budget is nothing short of an “existential threat” to British cafes, public houses and restaurants, the report stated.
However, Shore Cap remains “cautiously optimistic” about the UK supermarket sector, “believing that State-derived cost headwinds will remain manageable, modest inflation a positive, population growth stronger due to net migration, and we expect sector pricing rationality with ongoing productivity work”.
As a “very well ran firm”, Tesco PLC (LSE:TSCO) is a sector favourite for the broker with a buy recommendation on the stock