LONDON (Reuters) - The head of Britain's No. 2 fashion retailer Next (NXT.L) said it was prudent to be very cautious on the 2010 outlook because it was inevitable that government action to tackle the budget deficit would hit consumer spending.

"The sensible thing to do is to budget very cautiously for the rest of this year," Chief Executive Simon Wolfson told Reuters in an interview on Wednesday 5 May after Next updated on first quarter trading.

"Whether growth (in the economy) turns negative again is almost impossible to predict. But the one thing we can say with certainty is that whatever action is taken to curtail the deficit it's likely to put the brakes on any consumer recovery," he said.

He said how soon consumers are impacted by government action depends on whether the winner of Thursday 6 May's general election focuses on spending cuts or tax increases.

"It depends entirely on whether there are cuts or tax rises. If there are tax rises then it's going to depend on the timing of them," he said.

"Taxes can go up very quickly, particularly if it's direct taxes. If direct taxes go up that will impact the consumer pretty much the month that they occur. If it's indirect taxation then hopefully they'll be six months notice for that, so it will take a while for that to feed through."

Wolfson, a prominent supporter of the opposition Conservative Party, is among a group of business leaders that backed the Conservatives' call to scrap a planned increase in National Insurance, a payroll tax.

He has been tipped to become a working peer if the Conservatives win the election.

However, he said he did not intend to step down from his current job.

"I'm absolutely committed to Next and I've got no plans to leave," he said. (Editing by Mark Potter)