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

Next’s boss said the jury disagreed with the government’s economic plans as the retailer warned of the implications of future pressures on the cost of living.

Lord Wolfson – a Tory colleague – said ministers were ‘making the right noise’ about the supply-side reforms needed to boost the UK economy.

But he warned ‘the jury is out’ whether the strategy of Liz Truss and Kwasi Kwarteng would work. Next’s CEO spoke as it lowered its full-year earnings outlook, with sales expected to fall in the coming months.

The share price fell 12.2 per cent, or 650p, to 4674p as it reported a 16 per cent increase in pre-tax profits to £401 million for the six months to July.

But the chain, which trades from about 500 stores and online, expects turnover to fall by 1.5 percent in the second half.

It said August trade was worse than expected and September could receive a boost from the government’s energy bill, but that “the cost of living will rise in the coming months.”

Wolfson predicted that the pain caused by the surge in energy prices would be followed by the impact of sterling’s decline against the dollar, making imports more expensive, although it has fought back from record lows in recent days.

“It looks like we’re going to have two cost of living crises: a supply-led price squeeze this year, a currency-led price hike next year if the devaluation takes effect,” he said.

Wolfson said it was clear that the loan needed to fund Chancellor Kwarteng’s £45bn tax cuts, and an energy bill freeze that experts say could cost £100bn would put downward pressure on the pound.

“Whether or not they have overspent depends on the ambition and depth of their supply-side reforms,” he added.

“If the government is just as aggressive in tackling supply-side issues, there’s a chance that growth will make the stimulus pay off.

‘If those measures are not enough or if they are too late, the costs are difficult to justify.’ Next said costs were up 8 percent for next year’s spring and summer.

But Wolfson told the Daily Mail: ‘What we’re really worried about is the coming fall and winter, because we haven’t bought all our currency for that season yet. If the currency stays where it is, inflation in the cost of our goods will be most acute.’

Wolfson emphasized, however, that cost price increases will not be fully translated into retail prices.

He said Next would not hold back investing in technology and products, even as he sees the impact of inventory tights and currency weakness well into 2024.

He said: “We are not going to go off gas, however long this crisis lasts – and it will probably be six to eighteen months – at some point it will be over and what matters then is what shape the company is in.” in it.

“If we stop investing and cut back on things that we think are good investments, that’s a big mistake. When you’re in the middle of a crisis, it never seems to end.

“They always end.”

Wolfson said British consumers had built up savings in recent years and that the coming recession would be different from the one in the 1980s or 1990s, when huge numbers of jobs were lost.

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