Next Shares Slide Amid Warning on Weak UK Growth and Jobs

Published: 18 September ‘2025. The English Chronicle Desk

Shares in clothing and homeware retailer Next plunged sharply on Thursday morning after the company issued a stark warning about the UK economy, highlighting anaemic growth and mounting pressures on jobs and productivity. The FTSE 100 firm, chaired by Conservative peer Simon Wolfson, warned that regulatory changes, government spending, and rising taxes could continue to weigh heavily on households and businesses, reinforcing a cautious approach for the months ahead.

While the retailer insisted it did not foresee the UK economy approaching a “cliff edge,” it described the medium- to long-term outlook as “far from favourable.” In its half-year earnings report, Next detailed a series of factors constraining growth, including declining employment opportunities, regulatory changes that may erode competitiveness, government spending commitments perceived as unsustainable, and an increasing tax burden that could hinder national productivity.

“At best, we expect anaemic growth, with progress constrained by these factors,” the report stated. “The weakening outlook gives the company another reason to be cautious in its operational and investment planning.”

The warning followed the release of strong half-year results, which showed pre-tax profits soaring by nearly 18% to £509 million on a statutory basis. Sales across the six months to July rose by 10.3%, reaching £3.3 billion. The company announced a further £99 million dividend to shareholders, equivalent to 87p per share. Despite these robust financial results, Next’s share price tumbled by 6% at the start of trading, making it the largest faller on the FTSE 100 index.

Next and its leadership have been vocal critics of previous government policies, including last year’s autumn budget, which increased employers’ national insurance contributions. The retailer now expressed concerns about the pending Employment Rights Bill, which is expected to introduce measures banning zero-hours contracts, ending fire-and-rehire practices, and entitling workers to sick pay from their first day of employment.

While Next welcomed the government’s stated intentions behind the bill, it warned that several reforms could have unintended consequences. The retailer argued that certain measures might reduce overall job opportunities or limit earnings potential for entry-level employees. “Although we never used zero-hours contracts, the bill may curb low-hour contracts for many workers, depriving them of the flexibility to volunteer for extra hours when it suits them,” the report noted.

The company also highlighted the broader pressures facing workers at the lower end of the employment spectrum, citing the “triple pressure” of rising costs of living, increasing regulatory burdens, and job displacement due to mechanisation and artificial intelligence. These concerns, Next argued, could exacerbate challenges for both employers and employees, particularly in sectors reliant on flexible or part-time labour.

Analysts noted that Next’s statement reflects a broader unease among business leaders regarding the UK’s economic trajectory. Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, commented that the company’s warning suggested it was “clearly unimpressed by the current government’s performance.” At the same time, Chiekrie acknowledged that Next had exceeded its original sales guidance in the first half of the year, thanks in part to favourable weather, disruption at competitor Marks & Spencer, and strong international growth. Within the UK, both online and in-store full-price sales recorded mid-to-high single-digit growth, underscoring the company’s continued resilience despite economic headwinds.

Next’s operations extend beyond its flagship high street stores, encompassing the UK distribution of US brands Gap and Victoria’s Secret, as well as proprietary lines including Laura Ashley homeware and Ted Baker childrenswear and lingerie. The retailer also operates a comprehensive e-commerce platform, offering dozens of other branded products through its website.

Lord Wolfson has previously expressed concerns about the balance between government intervention and business competitiveness. He has argued that while some reforms are well-intentioned, they risk reducing flexibility in the labour market and could deter companies from hiring, particularly at the entry-level. Next’s latest commentary continues this line of argument, signalling caution amid evolving policy frameworks.

The company’s warning comes at a critical juncture for the UK economy. Rising inflation, higher energy and food costs, and regulatory changes affecting employment practices have all contributed to heightened uncertainty among businesses and consumers. Analysts suggest that retail companies, particularly those operating at scale like Next, are highly sensitive to changes in consumer spending patterns and policy shifts, making their warnings a bellwether for broader economic sentiment.

Next’s report reflects a balancing act: demonstrating financial strength and resilience while cautioning investors about potential risks ahead. Despite delivering strong profit growth and committing further dividends to shareholders, the firm has signalled that external pressures — including government legislation, taxation, and broader economic constraints — require careful navigation to maintain sustainable growth.

The company’s cautionary stance also highlights a broader debate within the UK regarding the future of employment practices and worker protections. The Employment Rights Bill, which has returned to the House of Commons following the departure of its former champion Deputy Prime Minister Angela Rayner, aims to improve job security and employee rights. Next’s concerns, however, underscore the tension between legislative protections for workers and perceived impacts on business flexibility and job creation.

As the UK economy faces continued uncertainty, the performance and outlook of major retailers like Next will be closely watched by investors, policymakers, and the public alike. The company’s recent results demonstrate that profitability is still achievable, yet its cautionary statements reflect real apprehensions about the structural challenges confronting the retail sector, broader economic growth, and employment trends.