Next warns against growth-‘stifling’ tax rises in Budget

Retail giant Next has warned against tax increases in next month’s Budget as it said consumers were already under mounting pressure from Iran war inflation and a weak jobs market.

In its first-half results, Next cut its outlook for UK sales growth in the final six months from 2.8% to 2% as it flagged concerns over the impacts on consumer spending from the rising cost of living, higher mortgage costs and a cooling labour market.

Chief executive Lord Simon Wolfson said: “These worries will only be compounded if they are accompanied by tax increases.”

He added: “The tax burden is at its highest level for over 60 years and seems to us to be at the point where further increases only risk stifling growth – and lower growth is likely to only worsen Government finances – a vicious circle.

“In our view, the best outcome for UK growth would be a credible plan to get Government spending under control – eliminating the fear of higher taxes – alongside supply side measures to boost growth.”

The comments came as Next delivered yet another profit upgrade after half-year trading was “much better” than expected in the UK and its overseas.

It saw half-year UK full price sales rise 3.6%, with 7.4% growth online offsetting a 1.7% drop in stores, while international online sales jumped 23.9% despite price rises in some markets amid the Middle East conflict.

This helped underlying pre-tax profits rise 10.5% to £569 million in the six months to July.

Statutory pre-tax profits lifted 11.2% to £566 million.

Next now expects full-year profits to rise by 8% to £1.23 billion and sales to increase 6.7%, up from growth of 7.3% and 6.3% previously expected respectively.