The boss of Marks & Spencer has warned over a £120 million hit from last week’s Budget measures and said the firm cannot rule out price rises to offset the extra costs.

Stuart Machin, chief executive of M&S, said the group would do “everything we can” to avoid passing on the extra burden to customers through price hikes, but admitted the group had a tough challenge to overcome the cost impact.

He said the Chancellor’s hike employers’ National Insurance (NI) contributions will increase the firm’s annual tax bill by about £60 million next year – from around £460 million currently to about £520 million.

M&S chief executive Stuart Machin (M&S/PA)

The increase in the national minimum wage announced in the Budget will also see its staff wage costs jump by another £60 million in 2025, having already risen by around 10% this year.

Mr Machin said: “We’ll do everything we can to make sure that cost is not passed on to consumers.

“It’s not easy but that’s our ambition.”

But he added the group “cannot rule anything out”, given that it is still early days in working through plans to counter the impact, on top of ongoing efforts to strip out £500 million in costs.

He said he “didn’t quite see the double whammy” coming, with the increase in the NI contribution rate – from 13.8% to 15% – coming alongside a significant cut in the threshold for when employers start paying the tax.

He said he was “hoping for something better” from the Budget, also hitting out at Rachel Reeves’s decision to delay any overhaul of the onerous business rates system to 2026.

And he criticised the Government for not tackling changes to the apprenticeship levy, which has been called for by many across the sector.

The comments came as the group notched up a better-than-expected jump in half-year profits thanks to buoyant food and clothing trading.

The retailer reported underlying pre-tax profits up 17.2% to £407.8 million for the six months to September 28 as its turnaround plan continues to pay off.

Like-for-like sales rose 7.5% across its food business and increased 5.3% in its clothing and home division, after a bounce back in demand for fashion ranges in the second quarter thanks to more seasonal weather.

But M&S cautioned that an “uncertain” consumer backdrop and cost pressures would continue into its second half.

It said: “During the first half of the year, cost inflation has continued to be elevated, running well ahead of price inflation and the consumer environment has been uncertain.

“Despite this, the business has traded well, growing volume and value market share.

“As we enter the second half, we expect this backdrop to persist.”

It said trading was on track in the first five weeks of its second half and that it was “confident of making further progress in the remainder of the year”.

The firm’s figures showed that on a statutory basis, pre-tax profits rose by 20.4% to £391.9 million over the first half.

Shares lifted 6% after the figures.

M&S said cost actions have driven savings of around £60 million in the half-year, which it said “largely” offset inflation.

Mr Machin cheered a strong result, but said there was “much to do”.

He said: “The easy thing to do today would simply be to say that these are good results, but that wouldn’t be the right thing to do.

“In the spirit of being positively dissatisfied, we have so much to do over this year and beyond.”

The company has been pressing ahead with a revamp plan in recent years, led by Mr Machin, including heavy cost-cutting and store closures, after previous attempts to regain its former glory fell short of the mark.