UK Budget underwhelms, no new support for retail
The UK government’s Spring Budget on Wednesday was never likely to deliver anything big for retail and it lived down to expectations with industry bodies welcoming some positive general developments but lamenting the absence of anything to address the key requests retail has been making.
So, no reversal of the decision to scrap VAT-free shopping for tourists, no liberalisation of Sunday trading hours in key shopping districts, and no movement on business rates.
On the plus side, Chancellor of the Exchequer Jeremy Hunt announced that the for Office Budget Responsibility (OBR) had just said “inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023”. That had been widely expected following the Bank of England’s interest rate rises and other measures over the past year.
Hunt also said the OBR was forecasting no recession for this year, just a contraction of 0.2% followed by growth of 1.8% in 2024.
Budget measures included some that would help to put more money in consumers’ pockets. They included childcare support, reducing the cost of alcoholic drinks in pubs to encourage socialising, ongoing moves to keep energy bills down, and freezing fuel duty.
For businesses, there were new investment zones and other investment-boosting measures, support to drive eco-based growth, and reduced paperwork for international traders, although Corporation Tax is still rising.
But as mentioned, the overwhelming reaction was of disappointment.
Dee Corsi, CEO of the New West End Company said: “The Chancellor has missed an opportunity to look again at Sunday trading hours and help address some of the damage done by his introduction of VAT on spending by international visitors. The West End continues to lag other global shopping destinations with less restrictive trading hours such as Dubai, New York, Milan, and even Paris where they have liberalised trading hours in certain tourist hotspots.”
Helen Dickinson, CEO of the British Retail Consortium, added: “Measures to support households with the cost of living, such as the ongoing energy bill support and changes to childcare costs, are welcomed. However, government must do more to limit one of the biggest drags to retail investment, which is oncoming regulatory burdens heading down the track, or risk a crash in business investment and further inflationary pressures.
“The Chancellor understands the need to train people to re-enter the workforce, yet he missed a key opportunity to fix the issues with the Apprenticeship Levy system that would support this very goal.
“While the Autumn Budget brought in some welcome changes to the business rates system, further reform is needed. The broken Business Rates system remains a drag on business investment, jobs, and economic growth. [It] makes business rates the final nail in the coffin for many struggling stores.”
And Martin McTague, National Chair of the Federation of Small Businesses (FSB) said: “The Chancellor has set high expectations for supporting small firms during these challenging times, but today’s Budget will leave many feeling short-changed. The distinct lack of new support in core areas proves that small firms are overlooked and undervalued. [The] 5.5million small businesses and the 16 million people who work for them will be wondering why the choice has been made to overlook them.”
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