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Next boss Lord Wolfson says 'the jury is out' on Truss's economic plan

Next boss Lord Wolfson says 'the jury is out' on Truss's economic plan

Next boss warns of bleak winter for High St: Tory peer Lord Wolfson says ‘the jury is out’ on whether Truss’ economic plan will work

The Next boss said the jury is out on the government’s economic plans – as the retailer warned of the impact of future cost of living pressures.

Lord Wolfson – a Tory peer – said ministers were “making all the right noises” about the supply-side reforms needed to revive Britain’s economy.

But he warned “the jury is out” on whether Liz Truss and Kwasi Kwarteng’s strategy would work. Next’s chief executive was speaking as he cut his full-year profit outlook as sales were expected to fall in the coming months.

Positive signs: Lord Wolfson – a Tory peer – said ministers were ‘making all the right noises’ about supply-side reforms needed to revive the UK economy

The share price fell 12.2%, or 650p, to 4,674p as it reported a 16% rise in pre-tax profit to £401m for the six months to July.

But the chain, which operates in around 500 stores and online, expects sales to fall 1.5% in the second half.

He said August trading was worse than expected and September could be boosted by government aid on the energy bill, but “pressures on the cost of living are expected to increase in the coming months.”

Wolfson predicted the pain caused by soaring energy prices would be followed by the impact of the pound falling against the dollar making imports more expensive, although it has held up in recent days at low levels. record.

“It looks like we’re about to have two cost of living crises: this year a supply-side squeeze, next year a currency-induced price hike as the devaluation takes effect. “, did he declare.

Wolfson said it was clear the borrowing needed to fund Chancellor Kwarteng’s £45billion tax cuts and an energy bill freeze which experts said could cost £100billion would put pressure down on the pound.

“However, whether or not they have overspent will depend on the ambition and depth of their supply-side reforms,” he added, saying he wanted changes to planning rules, tariffs, economic migration and energy markets to accelerate growth.

“If the government is this aggressive in addressing supply-side issues, there is a chance that growth will pay for the stimulus.

“If these measures are not enough or they are too late, it will be difficult to justify the cost.” Next said its costs rose 8% for spring and summer next year.

But Wolfson told the Daily Mail: ‘What really concerns us is next autumn and winter as we haven’t bought all our currency for this season yet.’ If the currency remains where it is, then the inflation of the cost price of our goods will be most acute.

Wolfson stressed, however, that cost price increases will not fully translate to in-store pricing.

He said Next would not hesitate to invest in technology and products, even if he sees the impact of the supply shortage and weak currency extending into 2024.

He said: ‘We’re not going to ease off, no matter how long this crisis lasts – and it’s probably going to be six to 18 months – at some point it will be over and what will matter then is what form is the business in.

“If we stop investing and reduce investments in things that we think are good investments, that will be a huge mistake. Whenever you are in the middle of a crisis, it seems like it will never end.

“They always end.”

Wolfson said UK consumers had accumulated savings over the past two years and the coming recession would be different from those of the 1980s or 1990s when large numbers of jobs were lost.

With vacancies still high, he said: “It looks like we’re going to have a full-employment recession.”

H&M profits plummet

Retail giant H&M blamed its profit slump on its exit from Russia and inflation.

The Swedish fashion and homewares chain posted profits of £56m in the third quarter, up from £500m in the same period last year.

The exit from Russia explains half of the fall. Rising commodity and freight prices, supply delays and a stronger US dollar leading to increases in the cost of purchasing US goods also played a role.

H&M suspended all sales to Russia shortly after the start of the war in Ukraine, selling the last of its stock there in July.

It had around 6,000 employees in Russia and the closure cost it £170million, he revealed.

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