Tax hikes in the Budget could push soaring food prices even higher, the chief executive of Sainsbury’s has warned.

Simon Roberts said that customers were already holding back spending ahead of this month’s announcement, days after Rachel Reeves laid the ground to break her manifesto pledge by increasing income tax.

In a major speech on Tuesday, the chancellor put the country on notice of “hard choices” ahead, saying that “we will all have to contribute”, as she tries to fill a multibillion-pound hole in the nation’s finances.

Economists have warned Ms Reeves that a combination of sluggish economic growth, higher borrowing and Labour U-turns mean she must raise taxes or tear up her flagship borrowing rules in the Budget, a move which would risk creating turmoil in the markets.

Mr Roberts warned that inflationary pressures had already significantly impacted the supermarket sector this year, adding: “What we don’t want to see is further impacts that may cause further inflation. No one wants to see inflation go any higher.”

Marks and Spencer boss Stuart Machin also warned that Ms Reeves’s pre-Budget speech had fuelled customer worries over tax hikes and said shoppers were now “planning for the worst”.

The industry has already absorbed significant hits, including a rise in national insurance contributions in April which cost Sainsbury’s an extra £140 million, Mr Roberts said.

New red tape on packaging also added “tens of millions” to its expenses, with prices raised in response, he added.

The warnings came as the Bank of England held interest rates at 4 per cent, despite policymakers saying they believed inflation had “peaked”.

The Bank’s governor Andrew Bailey told a press conference that he wanted to see more evidence over the longer term that inflation would not rise again.

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Members of the nine-strong committee voted five to four in favour of maintaining the rate, which is used to dictate mortgage rates and other borrowing costs.

Tony Blair’s think tank has warned Ms Reeves that she must slash taxes again before the next election if she breaks her key manifesto pledge and hikes them in the Budget.

It has also said any any tax hikes, such as raising VAT or income tax, must be done in tandem with pro-business policies to break Britain’s “tax-and-spend doom loop”.

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‘Equalising the scales’

Workers at BAE Systems in Lancashire have been cleared to proceed with planned industrial action after the High Court dismissed the company’s last-minute bid to block strikes.

The aerospace giant had sought an injunction against Unite the Union members at its Warton and Samlesbury sites, arguing their planned walkout was unlawful.

However, Mr Justice Soole refused to grant the injunction on Thursday, stating: “Having considered the evidence, the application is dismissed. I will give my reasons later.”

The ruling paves the way for strikes, which the union said were due to begin on Wednesday and continue until 25 November, following the rejection of a 2025 pay offer.

In written submissions, Bruce Carr KC, representing BAE, contended that Unite had invalidated the strike’s lawfulness by instructing members not to train managers in aircraft testing after giving notice to ballot on 24 September.

The barrister added: “It is the claimant’s case that the evidence clearly demonstrates that at that meeting and thereafter, Unite called on its members employed as quality professionals, to take industrial action in the form of refusing to undertake the training of managers employed by the claimant.”

Mr Carr said that in mid-September BAE wanted the training after “a number of absences” and while it was “considering business continuity plans in the event of possible industrial action”.

This training occurred between 22 September and 10 October, after which the quality professionals refused to continue following instructions from the union, Mr Carr said.

These workers breached their duty to BAE because they are “required to act in the best interests of the company to carry out such duties in respect of their appointment as they may reasonably be called upon to undertake”, the barrister added.

Oliver Segal KC, for Unite, said the training was a “request”, not an “instruction” and therefore workers who refused were not in breach of their contract.

He described managers being trained for the testing role as “unprecedented” and that union representatives had asked workers to get the “request” in writing while they seek legal advice.

In written submissions, he said: “The evidence in this case is that the defendant never even suggested, let alone ‘called’ on, its members who are quality professionals to refuse to comply with a management instruction to provide training to management executives.”

Mr Segal said BAE was “ludicrously interpreting” emails between union representatives discussing the training as instructions for union members not to comply.

The barrister also said there was no refusal to train the managers after 10 October and that one of the quality professionals gave a statement saying his team never stopped providing training.

He continued: “The reality is that this application is a last-minute, desperate attempt by the claimant to neuter the industrial action, which is both factually mis-premised and legally misconceived.”

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Mr Carr said on Thursday that BAE is considering an appeal.

A BAE spokesperson said: “We note the ruling by the High Court. We believe we had good grounds for the legal challenge and will consider the court’s judgment.

“We respect the right of employees to engage in industrial action and remain committed to a partnership approach with all our trade union groups.”

The PA news agency understands that less than 70 employees out of 12,000 are involved in the strike action while production lines are continuing to operate.

Speaking after the decision, Unite general secretary Sharon Graham said: “This unsuccessful attempt by BAE to prevent a lawful strike will have severely damaged the goodwill it has with its workforce.

“BAE is a multibillion-pound company making record profits.

“It now needs to come back to the negotiating table with an acceptable offer for striking workers in its Air division, rather than wasting money on pointless legal threats.

“Otherwise, our members will be taking strike action throughout November in their fight for fair pay.”

Rachel Halliday of Thompsons Solicitors, which represented Unite, added: “This is a clear win for Unite and for workers everywhere.

“The High Court has confirmed that the union acted lawfully at every stage, and that BAE’s attempt to block strike action had no basis.

“Today’s decision will send a strong message to employers that the courts cannot be used to silence workers standing up for fair pay and respect.

“Unite acted responsibly throughout, adhering to all statutory requirements, and this important decision reinforces the union’s members’ right to strike.

“Thompsons is proud to have stood with Unite in defending this principle. Working people have the right to be heard – and to take lawful industrial action when negotiations fail.”