Hiking taxes in the Budget will destroy growth and plunge UK into ‘vicious circle’, Next boss warns Chancellor

THE boss of Next has issued a stark warning to the Chancellor ahead of next month’s Budget, saying that hiking taxes further could destroy growth and send the UK spiralling into a “vicious circle”. Lord Simon Wolfson, chief executive of the high street giant, made the intervention as Next posted its half-year results. Next revealed that shoppers are already feeling the pinch from rising living costs, higher mortgage bills and a weakening jobs market. The retailer has slashed its outlook for UK sales growth in the final six months of the year from 2.8% down to 2%, blaming mounting pressure on household finances. Sign up for the Money newsletter Thank you! Lord 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.” The Next boss argued that ministers should instead focus on getting a grip of public spending rather than reaching for tax rises. He said: “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.” Lord Wolfson said the Government had “very little room for manoeuvre” and was unlikely to be able to afford further help for hard-pressed households given the state of the public finances. He warned that rising fuel and energy bills would continue to squeeze shoppers’ spending power. Most read in Money He added: “We’re not talking about a collapse in consumer spending, but the cost of living pressures from energy that are coming through will inevitably put downward pressure on that.” Next has already hiked prices in the UK by between one and two per cent in the first half of the year, and expects to keep raising prices at a similar rate for the rest of the year and into early 2027. However, the retail boss said cuts to tariffs on goods from India had helped ease some of the pressure by boosting competition among clothing suppliers, offsetting rising costs elsewhere. He said: “We’re not seeing significant price inflation on the goods we’re buying for spring and summer next year.” Despite the gloomy warning over taxes, Next delivered another profit upgrade after a stronger than expected first half both in the UK and abroad, with British sales given a boost by the scorching summer heatwave. UK full price sales rose 3.6% in the first half, driven by a 7.4% surge in online sales which more than made up for a 1.7% dip in store sales. International online sales soared by 23.9%, even with price hikes in some markets caused by the conflict in the Middle East. The strong performance helped push underlying pre-tax profits up 10.5% to £569million in the six months to July, while statutory pre-tax profits climbed 11.2% to £566million. Next now expects full-year profits to grow by 8% to £1.23billion, with sales forecast to rise 6.7%, an upgrade on its previous guidance of 7.3% profit growth and 6.3% sales growth. Comment now