we’re in for higher inflation and VAT and another economic slump, whoever wins the general election.

That’s the future according to Mark Constantine, co-founder of Lush, the handmade cosmetics company in Poole.

Speaking at the 10th anniversary of the Poole Business Women’s Lunch Club, he said: “I suspect VAT will go to 20 per cent and I expect inflation will go to much more.

“There’s going to be some other kind of drop coming in the next 18 months in the UK because the government is going to have to put some money down,” he said, referring to Britain’s £163bn deficit – the largest since the Second World War.

During the event at Storm, the fish restaurant in Poole High Street, he said that Lush “had a good Christmas” despite not doing well in Australia. “We’ve taken shops with high rents. We have had to put people in from Canada to put it right.”

He said the company, which is “feeling pretty strong”, is “looking at expansion”. With a note of caution, he added: “A classic thing entrepreneurial businesses do is go bust when they get too excited because they expand too much. We already have 750 stores around the world. We do not want to get too carried away.”

At the event, where he addressed more than 40 prominent Poole businesswomen, he considered the concept of ethical businesses and how customers must trust them. According to him, family businesses tend to be the most ethical because families tend to share similar values.

With a view to retaining its own autonomy, Lush bought out its backers last year.

During 2009 Lush donated £760,000 to charity and this year Mr Constantine hopes to give £2m.

“It’s given in small amounts, we have just given 30 small animal shelters £1,000 each,” he said. “You have to be very careful how you give. We look at the accounts and that helps us make a decision.”