Asda-Sainsbury's merger puts more than 2,500 jobs at risk, warns think tank

Supermarket boss has promised 10 per cent price cuts for customers

The impact of the merger on suppliers could spread further into the economy, the study shows (Reuters)

Up to 2,500 jobs in supply chains could be at risk from the proposed merger of Asda and Sainsbury’s, the New Economics Foundation has warned.

According to analysis by the think tank, the promised price cuts – Sainsbury’s CEO Mike Coupe has pledged a 10 per cent reduction for consumers – will be passed onto suppliers.

The NEF found that a 5 per cent cut in output for these suppliers could lead to a loss of more than 1,200 jobs, while a 10 per cent cut could lead to a loss of up to 2,500 jobs.

In addition, the NEF warned, total job losses connected to the merger could end up higher still “as these estimates do not cover the total supply chain, or the further impact of lost demand in local economies from reduced spending by companies, employees and their families, which could lead to further business closures and job losses outside of supermarket supply chains”.

“If the proposed merger between Sainsbury’s and Asda is allowed to proceed, we are likely to see a classic case of monopoly-like power in a mark,” said Alfie Stirling, head of economics at the New Economics Foundation.

“This is part of a broader picture, where time and again UK capitalism shows itself to be geared against small business in a way rarely seen in the rest of Western Europe. Small and medium-sized firms make up more than 99 per cent of all UK companies, 60 per cent of employment and nearly half of turnover, yet they are repeatedly required to play second fiddle.”

Business minister Andrew Griffiths said last week that he had spoken with the groceries code adjudicator, Christine Tacon, “to reiterate the importance of ensuring suppliers, and in particular SMEs, are treated fairly” by Asda and Sainsbury’s.