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John Lewis warns of price rises if Scotland backs independence John Lewis warns of price rises if Scotland backs independence
(about 3 hours later)
The chairman of the John Lewis Partnership has warned that prices will increase in Scotland if there is a vote for independence at next week's referendum. The chairman of the John Lewis Partnership has warned that prices could increase in Scotland if there is a vote for independence at next week's referendum.
Sir Charlie Mayfield said the employee-owned retailer did not intend to reduce its commercial operations in Scotland, where it has nine stores, a contact centre and more than 3,000 employees.Sir Charlie Mayfield said the employee-owned retailer did not intend to reduce its commercial operations in Scotland, where it has nine stores, a contact centre and more than 3,000 employees.
But he said that if Scotland voted for independence retailers would be unlikely to spread the higher operating costs of doing business there across the UK as they do now. He also warned that there would be economic upheaval in the wake of a yes vote. But he said that if Scotland voted for independence retailers would be unlikely to spread the higher operating costs of doing business there across the UK as they do now. He warned: "It's likely that in the event of a yes vote there will be business risks and economic uncertainty. What's happening in the market will clearly be a factor."
"From a business perspective there will be economic consequences to a yes vote, not just in uncertainty but some of the turmoil we are hearing about. "The costs of doing business for most retailers are somewhat higher in Scotland than the rest of the UK but most retailers have one price across the UK. In the event of a yes vote that might change."
"And it is also the case that it does cost more money to trade in parts of Scotland and therefore those hard costs, in the event of a yes vote, are more likely to be passed on. Andy Street, the managing director of the John Lewis department store chain, added that the retailer's "never knowingly undersold" promise might also be affected if Scotland were to become a separate country. "If it is in a different jurisdiction and prices in Scotland change overall then perhaps it would have to be 'never knowingly undersold in Scotland,'" he said.
"For various reasons – regulation and transport costs etc – it does currently cost more money to serve parts of Scotland." Mayfield suggested there would be no change for shoppers immediately after a yes vote but as the countries diverged, particularly on currency, but also on regulation, pensions and tax, prices in Scotland would probably rise. "It all adds up to an increase in the cost of doing business and I can't see prices staying the same," he said.
There would be no change immediately after a yes vote but as the countries diverged, particularly on currency, prices in Scotland would probably rise to reflect the higher costs, he told the BBC's Today programme. But Mayfield added that the group would work to make sure it stayed as one partnership if Scotland became independent. "We have built a thriving business for Waitrose and John Lewis that we are proud of and we want to maintain that and to grow and flourish and we what we would regret is an outcome that makes that harder to achieve."
He said the group would work to make sure it stayed as one partnership if Scotland became independent. Mayfield is the latest business figure to step into what he said was a "very, very fractious" debate on Scottish independence. Sir Ian Cheshire, the boss of B&Q owner Kingfisher, warned on Wednesday that prices would rise and that business investment would stall after a yes vote and called on other company chiefs to speak out.
"I would regret anything, obviously, which started to create divergence and really significant differences in the two markets that made it harder to achieve that."
Mayfield is the latest business figure to step into what he said was a "very, very fractious" debate on Scottish independence. Sir Ian Cheshire, the boss of the B&Q owner Kingfisher, warned on Wednesday that prices would rise and that business investment would stall after a yes vote and called on other company chiefs to speak out.
The John Lewis chairman made his warning as the group said sales had picked up in August after the supermarket price war took its toll on its Waitrose grocery chain in the first half of the year.The John Lewis chairman made his warning as the group said sales had picked up in August after the supermarket price war took its toll on its Waitrose grocery chain in the first half of the year.
Pre-tax profits for the six months to 26 July excluding exceptional items increased 11.8% to £130.6m but were flat when property profits of £11m were excluded. Increased business at the group's department stores made up for falling profits at Waitrose. Pre-tax profits for the six months to 26 July, excluding exceptional items, increased by 11.8% to £130.6m but were flat when property profits of £11m were excluded. Increased business at the group's department stores made up for falling profits at Waitrose.
The department stores' like-for-like sales rose 8.2% as the revival in the housing market increased sales at its high-margin home division. Fashion and electricals also sold well. The department stores' like-for-like sales rose by 8.2% as the revival in the housing market increased sales at its high-margin home division. Fashion and electricals also sold well.
Like-for-like sales at Waitrose rose 1.3% as the chain cut prices and battled to win business in the slowest grocery market for more than a decade. Competitors such as Morrisons are cutting prices as the big supermarkets struggle to cope with falling real wages and the onslaught from the German discounters Aldi and Lidl. Like-for-like sales at Waitrose rose by 1.3%, despite a 54% increase in online grocery sales, as the chain cut prices and battled to win business in the slowest grocery market for more than a decade. Waitrose spent £10m on cutting the price of stables such as milk, eggs and butter alone in the six month period. It was forced to react as competitors including Tesco and Morrisons cut prices amid falling real wages, and the onslaught from the German discounters Aldi and Lidl. The major supermarkets are struggling to cope with a lacklustre market as shoppers try to waste less food by buying little and often at convenience stores or shop online.
The fall in Waitrose's profit was partly down to market pressures but was mainly caused by investment in online sales, new and revamped stores and other changes, the group said. The fall in Waitrose's profit was partly down to pressure to cut prices but was also caused by investment in online sales and new and revamped stores, the group said.
Mayfield said: "The outlook in the grocery sector remains challenging and we expect that to continue to be the case for some time. In contrast, trading conditions in the non-food sector are more positive than has been the case for several years."Mayfield said: "The outlook in the grocery sector remains challenging and we expect that to continue to be the case for some time. In contrast, trading conditions in the non-food sector are more positive than has been the case for several years."