Major retailer sends warning about the future of the UK
Fashion retailer Next has warned that the UK faces a period of ‘anaemic’ growth as it grapples with issues such as rising unemployment and higher taxes.
“The medium to long-term outlook for the UK economy does not look favourable,” the group said in its half-year results published on Thursday (19 September).
“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,” it said.
Next identified these factors as:
- Declining job opportunities,
- New regulation that erodes competitiveness,
- Government spending commitments that are beyond its means,
- A rising tax burden that undermines national productivity.
“We first raised concerns about a potential weakening in UK employment in our report two years ago. Since then, vacancies have continued to fall, and PAYE payroll numbers are now moving backwards.
“The problem appears to be that employment, particularly at the entry level, faces the triple pressure of rising costs, increasing regulation, and displacement through mechanisation and AI,” it said.
Results show positivity
Despite the guidance warning, Next’s results were positive, with the group reporting a 13.8% rise in pre-tax profits to £515 million for the six months to the end of July.
Full price sales were up +10.9% and total Group sales (including markdown sales and subsidiaries) were up +10.3%.
Guidance for full price sales growth in the second half is +4.5% versus last year, giving guidance for the full year of +7.5%.
“In spite of the challenges presented by the UK economy, NEXT is in a good place, with multiple opportunities for growth, both in the UK and overseas,” the group said.
“Our enthusiasm is tempered by the knowledge that the first half was boosted by factors that are unlikely to continue, and the belief that the UK economy is likely to weaken going forward. However, on balance, we believe the positives for NEXT materially outweigh the negatives.”
