Next boss warns Britain faces another year of anaemic growth

Next chief executive Lord Wolfson warned that Britain faces another year of anaemic economic growth and rising employment costs, saying a rising tax burden undermines national productivity and that the medium- to long-term outlook for the UK economy does not look favourable. Wolfson, the FTSE 100’s longest-serving chief executive since taking the helm in August 2001, told investors and analysts that policy and regulatory environments were adding to a drag on growth.

"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." He repeated the point in the context of a broader critique of the country’s economic trajectory. The remarks came as businesses have urged 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." 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.

His grim warning came as Next hailed an uptick in group sales of 10.3 per cent to £3.25 billion over the six months to July. Profits rose 13.8 per cent to £515 million after the business was boosted by warm weather and a cyber-attack disrupting rival Marks & Spencer. And although investors did not receive another profit upgrade, the retailer stuck to its annual guidance for profits to rise about 9.3 per cent compared with last 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. Next shares slumped more than 6 per cent 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, an 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."