Business rates, energy bills and the cost of living are among the priorities for retail industry bodies as they call on the new Conservative Party leader Liz Truss for action now that she has taken over as Prime Minister. At the same time, they are calling for clarity and an end to the uncertainty around UK government policy since Boris Johnson resigned as Prime Minister in July.
Truss has just become Prime Minister following an audience with the Queen at Balmoral, and is likely to give the first insights into her plans when she addresses the nation from Downing Street at around 5pm.
The retail point of view
Helen Dickinson, chief executive of the British Retail Consortium, says Truss must “demonstrate strong leadership as the cost-of-living crisis deepens. Retailers continue to play their part, keeping prices as low as possible and helping households by offering discounts to vulnerable groups, expanding value ranges, raising staff pay, and offering reduced-cost or free children’s meals. The retail industry is ready to work with the new government to shore up consumer confidence and help deliver economic growth.
“Businesses need clarity on the government’s intentions as soon as possible so they can understand the inflationary impact of any policy decisions. One immediate way the Government can help retailers support their customers is to freeze the business rates multiplier for all retail businesses for the next financial year, protecting the industry from rates increases linked to inflation, and giving greater scope to hold down prices, protect jobs, and support the economy.”
Dee Corsi, chief operating officer of the New West End Company, which represents 600 businesses operating in London’s West End, says the organisation looks forward to working with Truss and her cabinet to rebuild trade in the area. Corsi adds: “As the country leans into harsh economic headwinds, it is crucial that the new Prime Minister and her wider Government prioritise measures that unlock business growth – namely a fundamental review of business rates, the reinstatement of tax free shopping and a re-evaluation of the UK visa system.”
Chris Brook-Carter, chief executive of industry charity the Retail Trust, says: “The UK retail sector is the single largest employer outside of the public sector and the largest employer of young people in the whole country. As such, we at the Retail Trust believe that we need and deserve to see much clearer leadership from government around the big structural issues that have caused the retail industry so much pain over the last five to 10 years and people working in the sector so much uncertainty.
“That includes everything from supporting lower paid workers and smaller retail businesses who are being disproportionately affected by rising energy bills and the cost-of-living crisis to finally sorting out the business rates issues and helping high streets around the country adapt to the new paradigms that are governing whether they can be successful or not. This also means easing planning laws so that we can see more residential come back into city centres and town centres to create more vibrant communities for retail and other businesses to thrive as well.”
The markets analyst perspective
Walid Koudmani, chief market analyst at financial brokerage XTB, offers his perspective on uncertainty that has affected the markets since Truss’ win was announced yesterday. “It’s pretty clear there is a degree of nervousness amongst UK investors to her premiership,” says Koudmani. “We already know she wants to initiate £30bn worth of tax cuts and borrow more to plug the hole in funds. Moreover, it’s looking more likely that as new PM, she will freeze energy bills to help contain the spiralling cost of living crisis. This would help to tame inflation but it will come at significant cost to government finances which will likely be paid for by more borrowing. This has led to inevitable concerns about the state of the UK economy and its public finances. UK debt now stands at 96% of GDP which is the highest since the 1960s. To make matters worse, with interest rates rising globally to slow rapid inflation, servicing debt has become more and more expensive. So there is certainly a degree of uncertainty over the economic plan under PM Liz Truss. This is why investors are selling out of the GBP aggressively and why UK bond yields are racing higher.
“Of course, now that Truss has won the premiership, we might see a different Truss to the one campaigning to become Conservative leader. This might mean her policies could be toned down somewhat and if we start to see moves such as this, it will likely make investors more comfortable.”