Rising taxes and increased employment costs are constraining business investment and growth in the United Kingdom, according to Archie Norman, chairman of Marks & Spencer (M&S) and former CEO of Asda. Speaking at M&S’s annual general meeting on July 7, 2026, Norman described the current environment as burdened by “big regulatory headwinds” that challenge companies’ ability to invest and prosper domestically.
Norman emphasized the impact of a confluence of macroeconomic, government, regulatory, and tax factors, which he said have never been more influential on business decisions. While discussing the upcoming leadership of Prime Minister-to-be Andy Burnham, Norman stressed that, despite uncertainties about government policies, companies must primarily concentrate on their internal operations, product offerings, and customer service. He added that it remains essential for business leaders to advocate for their interests with the government without losing focus on core business priorities.
The remarks come amid mounting criticism from leading retail executives regarding recent government measures, including Labour’s increases to employers’ national insurance contributions, rises in minimum wage levels, and tighter restrictions on flexible working arrangements. In May, Lord Simon Wolfson, chairman of Next, argued that curbing zero-hour contracts would hamper retailers’ ability to provide additional shifts to employees. Similarly, Stuart Machin, M&S’s CEO, reported at the AGM that the company faced £150 million in additional taxes this year, notably including the Extended Producer Responsibility levy on non-renewable packaging, which alone cost M&S £14 million in 2025. Machin described this levy as significantly impacting the profitability of M&S’s food division.
Machin also addressed shareholder concerns about the company’s pay strategy, particularly the decision not to implement a “real” living wage increase for staff this year. He highlighted that the recent tax hikes limit the firm's capacity to raise wages, even though hourly pay at M&S remains among the highest in the retail sector. Balancing rising costs while maintaining competitive employee compensation continues to be a challenge for the retailer.
Other industry voices have echoed similar concerns. The CEO of electrical retailer AO World criticized government policies as disconnected from economic realities after relocating most of its sales jobs abroad to mitigate high employment costs. These collective statements reflect growing unease among retail leaders over the government’s approach to labor regulations and taxation, which they argue risks stifling investment and operational flexibility within the UK’s retail sector.