The FTSE 100 fashion and homeware giant Next has warned that Britain is facing years of anaemic economic growth, with rising taxes, heavy regulation, and unsustainable government spending expected to weigh on productivity and jobs.
The retailer, led by Conservative peer Lord Simon Wolfson, said it did not believe the UK was heading for an immediate economic crash but stressed that the outlook remained deeply concerning. Announcing its half-year results to July, the company warned that the medium- to long-term prospects for the economy looked bleak.
“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 company said.
Shares in Next fell by as much as 6% on Thursday before recovering slightly, leaving it the biggest faller on the FTSE 100 despite posting strong results. The firm reported a near 18% rise in pre-tax profits to £509 million, with sales climbing 10.3% to £3.3 billion. A dividend of 87p per share, worth £99 million in total, will be returned to shareholders.
The business said warm spring and summer weather, alongside disruption at competitor Marks & Spencer following a cyber-attack, boosted sales of higher-quality clothing and homeware.
Lord Wolfson noted that job vacancies at Next had dropped by 35% in two years, largely due to better staff retention. Applications, meanwhile, had risen by 76%. While he welcomed the stronger retention figures, he suggested the wider trend reflected a nationwide decline in vacancies.
He also predicted that automation and artificial intelligence would reshape the labour market, cutting costs and boosting productivity but reducing entry-level opportunities. “My guess is that the effect is going to be felt most by those seeking to enter the workforce or move jobs, rather than those who are already in employment,” he said.
Next has long criticised government tax policy, particularly last year’s rise in employers’ national insurance contributions. On Thursday, Lord Wolfson also attacked the proposed employment rights bill, currently before Parliament, which aims to ban zero-hours contracts, end fire-and-rehire practices, and expand sick pay entitlement.
He argued that unless ministers define “low-hour” contracts reasonably, the reforms could hinder flexibility and harm both businesses and workers. “If they do, they will achieve their aims of eliminating the abuses of zero-hour contracts without having an adverse impact on flexible working. If that number is set too high, it will be bad for service and bad for employees,” he warned.
Despite concerns over the UK’s economic direction, analysts at Peel Hunt described Next’s performance as robust, noting upgrades each quarter. “While Next has reservations on the underlying UK economy and the challenges facing retailers, there is also an increasing confidence on the group’s growth potential and execution,” the broker said.
