Budget: Supermarket pledges to hold prices

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Andy Clarke, who took the company's top job last month, said the delayed introduction of the 20 per cent VAT rate would give him time to work out how to keep down its costs.

"VAT is the most obvious element that will have an impact on us but it wasn't unexpected," he said. "The good news is that it won't be introduced until January next year so we've got time to get our heads in the right place.

"By the turn of the year we will have made enough cost changes in our own business so customers don't see the difference in price come January 4."

Mr Clarke said the Budget was the start of a serious move to reduce the country's deficit.

"It will be a tough few years because we are in a world recession but from a business point of view we have to be prepared to stand shoulder to shoulder and tackle it head-on.

"The downside for customers is that it will be a tough time. We have got to do everything we can to keep the cost of living down for families. But Brits we are good in a crisis. Everyone rolls their sleeves up and it feels like we are at that stage at the moment."

Mr Clarke welcomed the reduction in corporation tax and National Insurance threshold, which he said would encourage business growth and boost employment. He added: "In the coming months people will be watching their pennies even more and as people have got less money to spend they want greater value. The good thing for us is that we are a value retailer so we are well placed in a market that will find it more and more challenging."

Asda has 374 stores and 170,000 employees. Last month it revealed plans to buy the UK arm of discount retailer Netto in a move that will add 193 stores to its chain.