UK shoppers concerned about interest rate hikes are spending less, the boss of Next has warned.

The fashion retailer said its sales will be hit as consumers fret over inflation and a tough jobs market.

Next, which has 458 shops and 20,000 staff, also said further tax rises could exacerbate anxiety.

The group added it was likely to see a ‘modest’ reduction in UK sales growth for the rest of the year. It predicts growth of 2 per cent for the final six months of 2026.

Chief executive Simon Wolfson said it would be a ‘slow, steady’ drop-off rather than a ‘precipitous decline’.

He added: ‘Our primary concerns are rising inflation, higher mortgage interest costs and a weak employment market. 

'These will be compounded if accompanied by tax increases. Disposable income is likely to remain constricted for consumers with lower levels of financial resilience.’

And he warned against adding to a tax burden ‘at its highest level for more than 60 years’, saying it risked ‘stifling growth’ and damaging Government finances.

It came as the retailer lifted its profit guidance for the fourth time this year. Pre-tax profits rose 10.5 per cent to £569million in the six months to July as shoppers sought new outfits in the heatwaves.

It anticipates annual profits will rise 8 per cent to £1.23billion. Sales jumped 6.7 per cent, and shares rose 2.5 per cent, or 360p, to 14,920p.