The boss of Marks & Spencer has warned of potential price increases next year following the tax increases announced by Chancellor Rachel Reeves in last week's Budget.

Stuart Machin said the hike in employers’ National Insurance (NI) contributions will increase the group's annual tax bill by about £60 million to £520m in 2025 while next year's rise to the national minimum wage will cost a further £60m. The latter comes on top of a roughly 10% increase in the wage bill this year.

“We’ll do everything we can to make sure that cost is not passed on to consumers," Mr Machin said as M&S released its interim financial results. “It’s not easy but that’s our ambition.”

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But he added that the group "cannot rule anything out" with the long-term impact on the company's customers and suppliers "uncertain". 

Ms Reeves announced last week that she plans to increase employers’ NI contributions by 1.2 percentage points to 15% from next April, while the minimum wage will rise by 6.7% to £12.21 an hour. For workers aged 18 to 20, the minimum wage will go up by 16% to £10 per hour.

Mr Machin called the wage increase "a good cost" and said M&S had planned for this and would try to absorb it by finding savings elsewhere in the business. But he added that what he didn't quite see coming was the "double whammy" of a steep decline in the threshold for when employers start paying NI contributions to £5,000, compared to £9,100 currently, in conjunction with the well-trailed increase in the rate of the tax.

His comments came as M&S posted pre-tax profits of £407.8m for the six months to September 28, up 17% on the same period last year. This performance was driven by an 8.1% increase in food sales and a 4.7% improvement for clothing and homewares.

The figures mark the latest stage in the recovery at M&S that has taken place under Mr Machin, who took the helm in May 2022, after previous attempts to regain its former glory fell short of the mark.

Two years ago the company suffered a 24% fall in interim profits as the cost-of-living crisis hit sales and pushed up costs. Under Mr Machin M&S has counteracted this by opening larger stores, closing unprofitable stores, and cutting prices on household basics.

Its retail estate currently spans 240 full-line stores and 325 food outlets.

“It has taken some time for M&S to right the ship, but we can firmly say that this has now happened and the company is on a good track to further growth," said Lucy Rumbold, equity analyst at Quilter Cheviot. "With Budget speculation now over and the lucrative festive season in full swing, we see no reason why the positive momentum cannot continue.”

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In May the company reported a 41% increase in full-year profits with sales across the business up by more than 9%. Bosses at the time declared M&S to be in its best financial health "in decades".

Commenting on yesterday's results, Mr Machin said: “Executing our strategy to ‘reshape M&S for growth’ has again delivered an increase in customers, sales value and volume, market share, profit and returns. Both food and clothing have now delivered market share growth for four consecutive years.

"Central to our strategy is our vision to be the most trusted retailer, with quality products at the heart of everything we do. This is not something we take lightly, and our relentlessness in delivering customers the best quality, innovation, service and value only available at M&S underpins our trading momentum."

Shares in Marks & Spencer closed yesterday's trading nearly 4% higher, up 14.7p at 398.2p.