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// Next CEO warns against tax cuts, saying the real crisis is shortages of goods and services as inflation sees its biggest increase in 27 years
// “Just printing money will not really increase the quantity of goods in the country.”
Next boss Lord Wolfson has warned that tax cuts will not fix the challenges currently facing the British economy.
The Tory Peirce and chief executive officer of fashion retailer said inflationary pressures that are eating into household income can only be tackled by increasing the supply of goods and workers.
Apart from helping the poorest in society, he explained that for most families “there is nothing the government can do” and “printing money” will do little to help the situation.
Lord Wolfson also predicted that when Britain headed into recession, there was likely to be a slight drop in earnings rather than significant job losses due to high levels of employment.
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He told The Telegraph: “There is a supply-side problem – a shortage of goods and services and skills.
“Just printing money will not really increase the quantity of goods in the country.
“So when people talk about help from the government, I think what’s very important is that the people who are in the worst position in society – the government can do a lot to make sure that those People are properly provided, so they can heat their homes and fill their stomachs.
“But there is nothing the government can do for everyone, because in the end, the problem is that there is less fuel, less goods, less services available, and that is why prices are going up.
“Printing money won’t change until you tackle that fundamental problem.
“It’s going to be some supply-side measures and changes in supply, rather than demand-side measures like interest rates and fiscal measures.”
His remarks came as the health secretary, Sajid Javid, defended the tax cuts proposed by Tory leadership frontrunner Liz Truss and insisted they would not drive up inflation, which rose to 1.75% on August 8, up from 1.25% – the biggest increase in 27 years.
Asked whether tax cuts are needed to boost the economy, Lord Wolfson would not compete for the next prime minister, but pointed to the need for “supply side” reforms.
He urged the government to boost home construction by unblocking the planning system, arguing that the housing market was “the biggest area of chronic inflation, and we have a planning system that doesn’t deliver”.
And he called on ministers to allow more workers from abroad to come in to help ease the labor shortage.
Lord Wolfson said: “If we have crops in our fields that no one is ready to pick, it won’t help inflation.
“It is going to be bad for inflation, as the crops will rot. And no one benefits from not allowing people to come into the country to harvest crops.
However, he said that while he expected the impending recession, it would primarily reduce household income rather than trigger massive job losses.
His comments come as Next upgrades its full-year profit forecast after warm weather and demand for formal clothing helped boost sales in the first half of the year.
The fashion retailer‘s sales performance exceeded expectations by £50 million, leading it to raise its full-year profit guidance by £10 million to £860 million.
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