Next boss warns Britain faces anaemic growth amid rising tax burden

Next chief executive Lord Wolfson warned that Britain faces another year of anaemic economic growth and falling employment, citing a rising tax burden that undermines national productivity. He said the medium- to long-term outlook for the UK economy does not look favourable.

The remarks come as businesses urge the Chancellor to rule out further tax hikes at her 26 November Budget. Wolfson also slammed regulation that erodes competitiveness and government spending beyond its means, warning there is strong evidence of a material squeeze on UK employment. The group says the jobs market has been impacted by rising costs, mechanisation, AI and new legislation, including Labour's controversial package of new employment rights.

Next reported a 10.3% rise in group sales to £3.25 billion for the six months to July, with profits up 13.8% to £515 million, helped by warm weather and disruption at Marks & Spencer. Wolfson said: "To be clear, we do not believe the UK economy is approaching a cliff edge. At best we expect anaemic growth, with progress constrained by four factors: declining job opportunities, new regulation that erodes competitiveness, government spending commitments that are beyond its means, and a rising tax burden that undermines national productivity." The remarks underscore a cautious tone about the economy even as Next rides a period of robust retail performance.

He noted that concerns about weakening UK employment were first raised in their report two years ago; since then, vacancies have continued to fall, and PAYE payroll numbers are now moving backwards. The problem appears to be that employment, particularly at the entry level, faces the triple pressure of rising costs, increasing regulation, and displacement through mechanisation and AI.

The results came as Next hailed an uptick in group sales and profits for the half-year. The group is broadly seen as one of Britain's most reliable retailers after it last year achieved £1 billion in annual profits, joining only a handful of other British retailers to have done so. Tesco, Marks & Spencer and B&Q owner Kingfisher are the only other listed UK store chains to have raked in £1 billion in profits in a single year. Next shares slumped more than 6% in early trading to 11,265p.

Next is considered a bellwether for the UK retail sector and consumer spending because its performance can signal broader economic trends. Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: "Next breezed past its original sales guidance over the first half, driven by favourable weather, major disruption at M&S and impressive international growth. While Next isn't expecting it to drop off a cliff edge, it does expect anaemic growth at best. The fashion powerhouse is clearly unimpressed by the current government's performance, which has brought about declining job opportunities, unfavourable regulation, unsustainable government spending, and rising taxes that make it harder for the economy to grow."