There were slices of good news for Britain’s retailers and SMEs in today’s Autumn Statement. However, there was also a filling of bad news on the overall economy and lack of business rates reform.
The home delivery expert ParcelHero, a champion of small retailers and SMEs, says there were layers of good news for small businesses in today’s Autumn Statement, but also a filling of less palatable announcements.
ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘Chancellor Jeremy Hunt’s Autumn Statement was a bad news sandwich for Britain’s beleaguered small retailers and manufacturers.
‘The top layer is the fact that the Government has now made permanent a tax break known as “full expensing”. This allows businesses to deduct spending on investment from their profits, meaning they pay lower amounts of corporation tax. Companies will get up to 25p off their tax bill for every £1 that they invest, amounting to a tax cut of over £10bn a year, according to the Treasury.
‘The bottom layer of good news for logistics and tech companies is the announcement of an additional £4.5bn of support for manufacturing, including £960m for new green industry firms. There’s also £500m promised over the next two years to fund more innovation centres to help make the UK an “AI powerhouse”. The role of AI is set to transform Britain’s online retail and tech industries over the coming years.
‘However, sandwiched between these two layers is a hefty filling of bad news. Firstly, Hunt’s speech revealed the Office of Budget Responsibility (OBR) has sharply downgraded its forecast for economic growth in 2024 and 2025 from previous predictions. The figure for 2024 has fallen from 1.8% to 0.7%, while 2025 has similarly plummeted from 2.5% to 1.4%. Those are big cuts in expected growth that will impact on businesses of all size over the next couple of years. Inflation and interest rates are also predicted to drop more slowly than expected.
‘Also leaving a bitter taste, the Government has again failed to tackle business rate reform, leaving many retailers and businesses in a state of limbo for another year. Yes, the Chancellor announced the reapplication of the sticking plaster that is the small business multiplier for a further year. He has also continued the 75% discount on business rates up to £110,000 for retail, hospitality and leisure businesses for another year. Although that should save the average independent shop over £20,000 next year, it still leaves the eventual resumption of these rates hanging like the sword of Damocles over many much-loved local stores. Businesses will find it hard to plan for the future until there is a proper solution to the vexed issue of rates.
‘One piece of good news for many people is that National Insurance will be cut by 2%, from 12% to 10%, from 6 January, 2024. That could add up to a £450 annual saving for someone on a salary of £35,000. It may be enough to boost consumer confidence at a vital time for retailers. Spending this month has been down on traditional levels for the beginning of the Christmas sales season.
‘Knowing there’s a New Year tax decrease might be the incentive for shoppers to return online and in-store and encourage a burst of early Christmas shopping, perhaps in time for Black Friday this week. However, for those of us who tend to leave everything until much later, ParcelHero’s continually updated Christmas deadlines tool is invaluable for keeping shoppers in the know with their favourite retailers’ final online order dates. Christmas Eve falls on a Sunday this year, which means many stores’ deadlines are earlier than usual.