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BUDGET 2023: ‘Boring’ and ‘nothing much for retailers’ – expert reactions

London, United Kingdom - March 15, 2023: Jeremy Hunt leaves Downing Street with the despatch box to present his spring budget to parliament on March 15, 2023 in London, England.

The Spring Budget delivered today was touted as being about creating jobs and, while it is good news that technically we won’t go into recession this year, what the budget has done for hard-hit retailers has been varyingly described as ‘very little’ to ‘boring’.

So what are industry analysts saying about the Budget’s impact?

 “Very little for retailers,” says RSM UK

According to Jacqui Baker, partner and head of retail at RSM UK and chair of ICAEW’s Retail Advisory Group: “There were no sweeteners in The Budget for retailers who are still facing tough trading conditions as household incomes remain under pressure with the high cost-of-living.

“The silence on VAT relief – which would have boosted tourism, footfall and sales from international visitors – and no mention of any longer-term help on business rates reforms is disappointing. 

“Some good news with regards to the economy not technically going into recession, but consumer confidence is vital for retailers and hopefully will provide some stability in the coming months.”

“Boring, but cause for some excitement,” says ParcelHero

Chancellor Jeremy Hunt’s predicted ‘boring’ Budget was not quite the snooze-fest some had predicted. The delivery expert ParcelHero says there were a few eye-opening moments and some positive news for businesses large and small – even though the much-criticised increase in corporation tax, from 19% to 25%, is still set to go ahead.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: “The really bad news for businesses was that the whopping climb in corporation tax, up from 19% to 25%, will go ahead as planned. However, its impact could be slightly offset by some other tax measures. This particularly applies to those companies investing in R&D, IT equipment, etc. Under Hunt’s “Full Expensing” plans, every pound a company spends on new IT equipment and new plants and machinery can immediately be deducted in full from taxable profits. Smaller businesses will also have an increased Annual Investment Allowance of up to £1m, meaning 99% of SME companies will be able to deduct the full value of all their investment from taxable profits.

“There was very little to wake up High Street retailers in this Budget, however, with no new moves to reduce business rates or boost other retail initiatives. However, High Street pubs and hospitality businesses will want to raise at least half a glass to the Chancellor for freezing the cost of a draught pint. From 1 August, the duty on draught drinks in pubs will be up to 11p lower than the duty in supermarkets.

“Transport and distribution companies could benefit from a new £8.8bn pot for sustainable transport initiatives across the regions. Many working drivers will be delighted by the news that there will be an extra £200m spent on filling in the UK’s thousands of potholes. The announcement that fuel duty will remain frozen and the 5p reduction will be maintained for another year will also be welcomed by many owner-drivers.

“Many transport and supply-chain companies wanted to see considerably stronger greener measures. While there were few initiatives to get Britain’s motorists switching to electric power, news of a new carbon capture scheme, backed up with £20bn in support, will be greatly welcomed. This could cut around 20-30m tonnes of CO2 per year by 2030.

“As well as being the “boring budget”, this was also expected to be the “back to work” budget. Retailers and other businesses will be pleased to see several measures around increased childcare that will help parents afford to return to employment. The launch of so-called “Returnaships” (apprenticeships for more mature workers, focussing on flexibility and previous experience) will also help boost the amount of people available to work.”

“Fuel duty cut welcomed,” says Logistics UK

Logistics UK’s Chief Executive, David Wells, comments: “Logistics is the UK’s system for growth and today’s budget announcement was an opportunity for the Chancellor to ensure continued – and potentially increased – investment in green growth and fulfilling careers, while keeping prices down in the shops.

“Today’s announcement that the 5ppl cut in fuel duty is to be retained for a further 12 months is very welcome news for logistics businesses, particularly SMEs – who make up 99% of the industry, and traditionally operate on low margins. Logistics UK has consistently urged government to extend this cut, while maintaining revenue levels through VAT and other sources. Logistics is at the heart of every sector of the economy; this decision recognises the importance of managing logistics costs to avoid further inflationary pressures on business and consumers. This should help to ensure businesses have the funds to invest in productivity, growth and greener technologies, alongside the new policy for full capital expenditure announced as the successor to the super-deduction (providing it encourages the transition to a zero-carbon economy).

“However, Logistics UK is dismayed by the lack of support to help businesses with energy costs and our sector’s transition to a low carbon economy, something which the government has urged industry to commit to. This is a missed opportunity. Our members will also be concerned about proposals for a reformed HGV road user levy and together we will be seeking urgent clarification as to the detail involved.

“While we are also disappointed there was no reference to much-needed Apprenticeship Levy reform, it is encouraging that government is focused on supporting people into work, which will help to relieve the existing skills gaps in industry and the wider UK economy. Logistics UK will work with its members to scrutinise the detail and identify what these measures will entail, such as the announcement of skills bootcamps and Returnerships, and whether these will provide a credible pathway into logistics.”

“Investment zones miss the point,” Martin Bysh, CEO and Co-Founder, Huboo.

“This latest attempt to stimulate regional growth feels worryingly out-of-keeping with our increasingly digitised economy. Government assistance for growing businesses should be aimed at the entrepreneurs best able to take advantage of it, regardless of location. Creating investment zones is an arbitrary approach that will inevitably fail to support 1,000s of British entrepreneurs who are building high-potential businesses from their kitchen tables. These businesses exist all over the country and need to be supported and encouraged to keep growing, regardless of whether they’re near an investment zone.”

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