Business leaders are calling for more stability after Chancellor Jeremy Hunt's mini-Budget bonfire and want a clear roadmap out of the economic turmoil.
Shevaun Haviland, director general of the British Chambers of Commerce, said that the Government once again risks a 'cliff-edge' by scaling back on the energy support pledge which will only target the most vulnerable after April.
Under the original scheme, businesses are protected for six months with a review set to determine those who are most in need for continued support.
Ms Haviland continued : "The Chancellor’s buzzword was stability. But what we’ve seen from him is a plan for today and nothing for tomorrow.
"Following the economic turmoil of the last few weeks he had to press the reset button.
"But businesses will be dismayed by the decision that looks set to strip back the energy support for firms from next April. This will be a hammer blow for many who were already worried about how they will survive.
READ NEXT: The key points of the mini Budget, U-turns and what's been scrapped
"The government must commit to a full consultation with firms ahead of that cliff-edge to provide some certainty on where any targeted support will go. Energy costs keep business owners awake at night, alongside rising inflation and interest rates."
He was speaking after Mr Hunt's emergency announcement that all but scrapped the entire mini Budget except for the National Insurance rise reversal and the Stamp Duty cut.
Some of the U-turns include:
- The basic rate of income tax will now remain at 20%
- VAT-free shopping for overseas visitors scrapped
- Planned increases in the duty rates for beer, cider, wine and spirits will now go ahead
David Hudson, restructuring advisory partner at FRP, said: "After all the disruption of the last few weeks, these latest changes bring the picture for businesses nearly completely back to its starting point.
"Management teams will have picked-up on the Chancellor’s warnings that there will be more difficult decisions for the Exchequer in the months ahead, heralding the potential further changes to come."
Tim Sarson, Head of Tax Policy at KPMG UK, said the statement may bring a 'period of calm' to tax policy.
He said the new Chancellor is looking to prioritise market stability over growth for the short to medium term.
The largest fiscal announcement in the new Chancellor’s statement was a Treasury led review into how to support households and businesses beyond April 2023 in relation to energy prices.
And he pointed out one noticeable absence from the announcement which was any comment on investment zones, a key pillar of the Prime Minister’s leadership campaign.
The decision to abandon the freeze in alcohol duty has been condemned by the Scotch Whisky Association.
He warned the decision would "add to pressures in the UK hospitality industry, and household budgets as costs inevitably increase".
Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA), agreed, saying the decision is 'a huge blow to brewers and pubs'.
She said: “The freeze would have delivered a £300 million saving to our industry at a time when we desperately need any relief we can get, to help to keep a lid on spiralling costs and keep the price of pint affordable for pub goers this winter.
“The cost of doing business is completely out of control for pubs and brewers and the failure to act today to reduce pressures on businesses will hit them extremely hard.”
Joanne Thorne, technical compliance manager at SJD Accountancy, said the new measures will make financial planning for the self-employed challenging in the coming weeks and months.
She said: "Limited company directors will be hit hardest, with a triple whammy from higher dividend rates, the IR35 reform staying in place and the U-turn on Corporation Tax.
"It’s disappointing to see another Chancellor failing to acknowledge the important role of the self-employed within our economy.
"Time and time again the self-employed are being asked to shoulder the economic burden, and it seems highly unlikely the new Chancellor will do anything to make this job easier."
Rain Newton-Smith, CBI chief economist, said: "The Chancellor is acting swiftly and firmly in looking to restore confidence to markets and businesses.
"Macro-economic stability is the number one priority right now - the pre-condition to economic growth.
"Businesses will work closely with the Chancellor on an affordable plan for sustainable economic growth that drives investment and supports living standards."
Kitty Ussher, chief economist at the Institute of Directors, added: "It is of course right for the Government to focus on restoring stability and confidence - without that growth is impossible."
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