Next has claimed the UK can count on “anaemic” financial progress and declining job alternatives because of the present degree of taxes and authorities spending committments.
The warning from the style retailer, led by chief govt Lord Wolfson, a Conservative peer, comes because it reported a 13.8% rise in pre-tax earnings to £515m for the six months to the top of July.
However shares within the enterprise, which has greater than 500 shops within the UK and Ireland, fell 6% on Thursday through the early buying and selling.
The firm mentioned it didn’t consider the financial system was “approaching a cliff edge” however the weakening forecast gave it “another reason to be cautious”.
In its outcomes, the retailer mentioned: “The medium to long-term outlook for the UK economy does not look favourable.
“To be clear, we don’t consider the UK financial system 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.”
It outlined a surge in half-year earnings boosted by the summer season climate and disruption at rival Marks & Spencer, which was brought on by a significant cyber assault.
However, Next expects gross sales progress to gradual sharply due the financial system outlook and dampened client spending.
“We first raised concerns about a potential weakening in UK employment in our report two years ago”, the corporate mentioned.
“Since then, vacancies have continued to fall, and PAYE payroll numbers are now moving backwards.
“The drawback seems to be that employment, notably on the entry degree, faces the triple stress of rising prices, growing regulation, and displacement by means of mechanisation and AI.”
The warning from the retalier comes ahead of the government outlining its tax and spending plans in the Budget in November.
Next said job vacancies within the chain were down 35% – with steeper falls within stores.
But it said the business was “in a very good place, with a number of alternatives for progress, each within the UK and abroad”.
Independent retail expert Clare Bailey, founder of the Retail Champion, said Next’s bumper profits were “superb… contemplating the present local weather”.
She highlighted the challenges facing High Street retailers such as the collapse of Claire’s and Poundland.
“You’ve obtained all this stress on an trade which is making an attempt its finest to outlive,” she said. “National Insurance is a large burden, rising prices, and the minimal wage enhance.”
Retail analyst Natalie Berg said Next was “one of many extra resilient retailers” but despite the surge in profits, the company was not immune to the “complete Tsunami of prices which have hit the sector”.
“They’ve been capable of journey out the storm – however I feel with these inflationary headwinds – that hinders a retailer’s skill to spend money on shops, to spend money on employees, and a few of these prices will inevitably be handed on to customers by means of greater costs.”
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