Next chief Lord Wolfson: 'We need to see growth in the supply side of the economy'

Lord Wolfson cast more doubts over the strength of the UK’s recovery yesterday, 24 hours after George Osborne promised a Budget for investment and savers (Rex Features)

Tory peer Lord Wolfson has warned the UK "cannot bank" of a return to sustainable growth, 24 hours after George Osborne promised a Budget for investment and savers.

The Next chief executive’s warning came as the FTSE 100 retail behemoth overtook Marks & Spencer with a 12 per cent rise in annual profits to £695 million for the year to January.

Sales at the UK’s second-biggest clothing chain could rise by up to 8 per cent this year with profits hitting £770 million, Wolfson said, as he promised another £300 million for shareholders this year through dividends or buybacks.

But the comments of the peer — married to the Chancellor’s adviser Eleanor Shawcross — poured cold water on Osborne’s efforts to kick start investment yesterday, through measures such as extending and doubling to £500,000 the annual investment allowance.

Wolfson said there “didn’t seem to be anything that is going to dramatically change the course of the UK economy one way or another over the next year or so” and warned that the UK “cannot bank” on a return to sustainable growth.

He said there were “encouraging signs” for consumers in the narrowing of the gap between wages and inflation but added: “The economy is at a turning point but we can’t be sure which way it is going to go.”

He urged politicians to do more to encourage growth, adding: “We need to see growth in the supply side of the economy. There are three very significant parts of our economy, which are energy, housing and transport — all of which at the moment are highly constrained by policy. Until we see significant investment in those three areas it will be difficult for us to see a really strong recovery.”

Next’s sales grew 5.4 per cent to £3.74 billion last year as revenues from its Directory online and catalogue business rose 12.4 per cent, narrowing the gap with its shops, where sales grew 1.7 per cent.

Despite his downbeat tone, Wolfson has more than trebled the Next share price in the past three years and the stock was in demand again today, adding 102.5p to 6682.5p, up 2 per cent.

The company, which has prospered while M&S and Debenhams struggle, did not give details on recent trading but Wolfson hinted the mild winter is likely to have dented sales.

To reflect consumers’ trend to purchase closer to when they need clothing, Next is aiming to increase availability of cold weather wear in January, February and March and warm weather goods in August and September.