Rachel Reeves has been urged to stop ‘taxing everything’ by the boss of one of Britain’s biggest supermarkets.

In a stinging rebuke as the Chancellor plots another round of tax hikes, the chairman of Asda warned surging costs in the wake of the last Budget are battering businesses and the middle classes.

Retail veteran Allan Leighton accused Ms Reeves of ‘taxing everything in some way, shape or form’ - driving up prices in the process.

‘There’s no doubt all of this is hitting the pocket of the consumer. And when that happens, that’s not particularly good for anybody,’ he said.

‘I think there’s more gloom than we’ve seen for a long time.’

The comments came amid speculation the Chancellor will have to find another £50billion to make her Budget numbers add up this autumn.

The criticism from Mr Leighton will be felt particularly keenly in government as he was recently chairman of The Co-operative Group which sponsors 41 Labour MPs.

With Labour already having watered down planned cuts to welfare spending, it is feared this will come in the form of tax rises with pensions, savings and property in the firing line.

Ms Reeves faced a fresh backlash yesterday over plans to tax landlords while she was last night urged by a Labour-leaning think tank to introduce an £8billion a year windfall tax on high street banks.

But while the Chancellor plots more tax hikes, economists have warned she must drastically cut public spending to avoid a 1976-style bailout by the International Monetary Fund.

And with the UK government paying more to borrow on the bond markets than any other country in the G7, experts have warned Britain is ‘drifting without an anchor’ under Labour and facing a ‘moron premium’.

Britain is already reeling from £40billion of tax rises in the last Budget - which many blame for sapping growth and costing jobs.

The retail sector has seen annual costs jump by £7billion, driven by the increase in national insurance contributions and minimum wage.

Asda was among a slew of firms - alongside the likes of Tesco, Sainsbury’s and John Lewis - to write to the Chancellor last week to warn against further tax rises.

Speaking yesterday, Mr Leighton, who has previously held top jobs at The Co-op and Royal Mail, said the Government’s policies are ‘contributing to inflation’ which is ‘hitting the pocket of the consumer’.

And he urged the government to stop attacking business.

‘Growth isn’t driven by government,’ he said, adding that if companies cannot invest ‘then we will not grow no matter what the government says or does’.

Tory business spokesman Andrew Griffith said: ‘Top retailers know they’d be out of business if they don’t deliver value for customers. It’s a shame the Chancellor doesn’t share that mindset.

‘The only way to get the cost of the weekly shop down is for Labour to stop piling on taxes.’

The Confederation of British Industry (CBI) yesterday said the situation is now so bad that companies are ‘increasingly shifting focus to short-term fire-fighting’ rather than on hiring new staff and investing in the future.

‘The government’s fiscal decisions are continuing to bite,’ said Martin Sartorius, principal economist at the CBI. ‘Business cannot be asked to balance the books again at the Autumn Budget.’

Official figures yesterday showed poorer households are experiencing a bigger cost of living squeeze than the wealthy - undermining Labour’s claim to be protecting the less well-off.

Analysis by the Office for National Statistics (ONS) shows that inflation experienced by poorer families has hit 4.1 per cent.

That compares with 3.8 per cent for high-earning households.

It is the first time that lower income families have experienced higher inflation than the wealthy since 2023.

Shadow chancellor Mel Stride said: ‘Inflation has nearly doubled since Labour came to power - and it’s ordinary working families, already feeling the pinch, who are being hit the hardest.’

The figures fly in the face of Labour’s claims that its economic policies will shield working people and instead look to ‘those with the broadest shoulders’ to contribute more.

Headline inflation stood at 3.8 per cent in July, an 18-month high and up from 2.2 per cent when Labour came to power a year ago.

The UK economy is also beset by rising unemployment and slowing growth - with Ms Reeves’s £25billion tax raid on employers through their national insurance contributions blamed by many experts for the gloom.

But with Left-wing Labour MPs vehemently opposed to spending cuts, Ms Reeves is under mounting pressure to fill the hole in her Budget plans with yet more tax rises.

The Institute for Public Policy Research (IPPR) said a new bank levy could raise £8billion a year.

The proposals are likely to fuel a backlash from lenders. Bosses at Natwest and Lloyds warned the Chancellor last month that a tax raid on the sector risked holding back their efforts to boost the economy by financing growth.

Trade body UK Finance criticised the proposals, arguing that a further tax on banks would make Britain less internationally competitive.

‘Banks based here already pay both a corporation tax surcharge and a bank levy,’ it said. 

Ms Reeves must find £50billion in tax rises or spending cuts, the National Institute of Economic and Social Research (NIESR) said.

The Chancellor has vowed to stick to her pledge to not raise income tax, national insurance or VAT – and will also keep her fiscal rules preventing more borrowing.

She is considering extending a freeze on income tax thresholds, introducing a 'mansion tax' on the sale of expensive homes and plotting a raid on the gambling industry, The Telegraph reported.

She is also said to be considering hiking business rates for larger units, which could lead to bigger bills for supermarkets.

Asda boss Mr Leighton said the changes would be 'very unhelpful'.

He added: 'All these things don't make life easier. They are contributing to inflation, and inflation is hitting the pocket of the consumer.' 

Disgruntled retail bosses last week suggested they would not be able to 'absorb' a further increase in costs, which could see prices rise for consumers and deliver a fresh hit to Brits' living standards.

Tesco, Sainsbury's, John Lewis, Morrisons, Aldi, Lidl, Ikea, Boots, JD Sports, Currys and Kingfisher are among those to have signed a letter to the Chancellor.

They pointed to how Government policies had already 'added £7billion in new costs to retail businesses'.

This included Ms Reeves's hike to employers' National Insurance contributions, an increase in the minimum wage, and the introduction of a new packaging tax.

The retailers, who are part of the British Retail Consortium, warned further tax rises for businesses would leave Labour at risk of breaching its manifesto pledges.

Asda was named this week as the worst performing major supermarket over the three months to August 10.

Sales fell 2.6 per cent to £4.22billion over the period, making it the only grocer to see sales plunge, apart from the Co-op which saw a 3.2 per cent drop.

Its market share has fallen from 12.7 per cent to 11.8 per cent in the past year, market researcher Worldpanel said.

Figures from the supermarket itself also revealed that the disposable income of middle-class families had fallen for the first time in two years.

Asda has put pressure on its suppliers to cut their own prices in recent months, in an attempt to win back customers. 

Mr Leighton said: 'We try to do the right thing for the customer and if the suppliers want to come with us, and a lot of them do, then we take that support.

'But if we think it's the right thing to do for the customer, we're going to do it anyway.'

Prior to last year's general election, Sir Keir Starmer's party pledged to boost economic growth and families' living standards.

Official figures published yesterday showed the headline rate of inflation rose by more than expected last month to 3.8 per cent.

This was the highest level since January 2024, while food and drink inflation rose to 4.9 per cent in July from 4.5 per cent in June.

Ms Reeves admitted there was 'more to do to ease the cost of living' following the figures.

The British Retail Consortium said Labour policies had 'driven up the costs of employment' and were 'fuelling price rises at the till'.

In their letter to the Chancellor, which was due to be delivered to the Treasury last week, the retailers said they had 'done everything we can to shield our customers from the worst inflationary pressures'.

'But as they persist, it is becoming more and more challenging for us to absorb the cost pressures we face,' it added.

'This year Government policy has added £7 billion in new costs to retail businesses, resulting from changes to employer national insurance, higher employment costs, and the introduction of a new packaging tax.

'Similar increased costs are also starting to flow through our supply chains.

'Food prices - which had begun to ease - are once again climbing. The British Retail Consortium expects food inflation to hit 6 per cent later this year, driving up household bills just as winter energy costs start to kick in.

'The impact is further being felt by communities as retail investment falls and 100,000 retail jobs have been lost over the last year alone.

'Labour's manifesto made a clear and welcome promise to deliver good jobs and higher living standards but if future policy decisions lead to rising prices and fewer jobs, then those commitments are at risk.

'Instead, the retail industry is uniquely placed to help deliver the Government's central economic mission given our presence in almost every community across the UK.'

Asda boss Mr Leighton has now called on the government to 'invest in Britain' in order to achieve economic growth. 

He told City AM: 'Growth isn’t driven by government. Growth is driven by organisations and companies and people. And if they can’t invest, then we will not grow, no matter what the government says or does.'

Earlier this year he admitted the supermarket chain is 'struggling' and has warned profits will fall further amid an investment to improve stores.

Mr Leighton, who stepped into the role of chairman in November, said it was 'quite obvious' that changes needed to be made to improve efficiency.

'It's pretty difficult to say the business isn't struggling when its sales are down five per cent,' he said.

There are some signs of recovery, even though sales were down 0.2 per cent in the three months to the end of June, it was the supermarket's best quarterly performance since the start of 2024.

But Asda warned that sales could still take a hit as it races to complete its long-awaited IT upgrade.