East Midlands business leaders have urged Chancellor Jeremy Hunt to follow through on his plan to rebuild the economy and help business with one accusing his autumn statement of being “low on wealth-creation”.
As the OBR slashed its forecast for economic growth and inflation hits a 40 year high of 11.1 per cent, the Chancellor is in the desperate situation of trying to balance the books without alienating voters or pushing the UK further into recession.
With many businesses already thinking twice before investing in capital or workers, he warned the country faced growing unemployment as he set out a package of £30 billion in spending cuts and £24 billion in tax rises over the coming five years.
Blaming a “global energy crisis, a global inflation crisis and a global economic crisis” the Chancellor said while benefits would go up for the poorest, taxpayers and businesses “with the broadest shoulders” would have to pay more.
Measures announced included dropping the 45p top rate income tax threshold from £150,000 to £125,140, and cutting the tax-free allowance for capital gains from £12,300 to £6,000 next year and to £3,000 in 2024-25.
He also said the windfall tax on oil and gas giants will increase from 25 per cent to 35 per cent while a 45 per cent levy on electricity generators will help raise an estimated £14 billion next year. Opposition MPs said he missed the chance to raise further billions through a windfall tax on retail giants such as Amazon.
Government spending will continue to increase in real terms the next five years, but at a slower rate than previously planned while stamp duty cuts announced in Kwasi Kwarteng’s short-lived mini-budget will end on March 31, 2025.
Many business leaders said they were still ready to support the economy – if the Government was ready to support them.
Jennifer Thomas, FSB development manager for Leicestershire, Northamptonshire and Rutland said budget was “high on stealth-creation and low on wealth-creation”, piling more pressure on the UK’s 5.5 million small businesses, their employees and customers.
She said: “While tackling inflation is essential, so are measures to create conditions for prosperity, growth and support enterprise. Today is a missed opportunity to avoid further economic slowdown.
“Small businesses, which account for more than 16 million jobs in the UK, were already facing an acute cost of doing business crisis through soaring costs, falling revenues, shrinking availability of affordable finance, and a rise in invoices being paid late.
“On top of all that, they now face even higher taxes, cuts to innovation, and a recipe for a longer and deeper recession.”
She added: “It is welcome that the energy support package for small firms will remain in place until April, helping them through a very tough winter ahead.
“However, going forward, continued support should not be viewed through the narrow lens of specific sectors, but rather based upon the size of a business.”
Nottingham-based Luke Willmott runs Autocoincars.com, a car marketplace that allows dealerships to advertise their cars for sale to cryptocurrency users
He said: “Starting a business shortly prior to Brexit and the Covid-19 pandemic has increased the difficulty of surviving for many start-ups.
“However, in spite of the economic difficulties brought on by Brexit we have managed to make AutoCoinCars thrive.
“If Jeremy Hunt can follow through on his plan to rebuild the economy and help small businesses and public service then perhaps we have hope for the UK after all, but until we see those plans becoming actions we will continue to crack on and do our best to build our business.”
Leicester recruitment specialist and East Midlands Chamber director Eileen Richards was less convinced about the Chancellor’s promises.
She said: “The sentiment of a ‘stronger, fairer economy’ is nice rhetoric but we have heard this many times before and we await to see how it plays out for business and public services.
“What we do know is that major employers, both in Leicestershire and around the world, are already closing and that huge numbers of people are losing jobs.
“This is potentially going to impact the jobseeker-led recruitment market we have seen in recent years – a lot of very skilled workers may suddenly enter the market.
“This raises big questions about the Chancellor’s point that public spending will ‘grow slower than the economy’ at a time when people are seeking support as they either look for jobs or to access business development services to set up their own businesses.
“Also, beyond a veiled reference to future targeted business support, there was no detail on support for the cost of energy after April 1 and this is a key ingredient for business planning, and will affect investment intentions in plant, machinery, technology and the development of people.”
Lisa Botterill is a partner and specialist in corporate finance, mergers and acquisitions and private equity in the Leicester office of law firm Shakespeare Martineau.
She said: “The chancellor has slashed the tax free allowances on dividends and capital gains so that by 2024/25 they will be a quarter of what they are now.
“While we aren’t talking about large sums of money overall the restriction of these allowances shows just how far the government has felt it needs to go to find small savings here and there to try and balance the books.
“This is a nibble at another set of taxes that is generally paid by the more-well off citizen, who is considered able to pay.”
North Leicestershire-based entrepreneur Steven McKerrow owns a start-up called Mouseskins which upgrades computer mice for hard-core gamers.
He said the Government – while generally positive to the sector – had missed a trick to support esports which has just been recognised by the European Parliament for its positive economic contribution.
He said: “My big question is, is the UK following suit? Can we leverage this economic boom in the UK and finance these innovators and digital trend setters to rejuvenate our country, without silly tax, or overruling.
“Will the UK GOV enable or just debate it for many more years?”
Ian Hodgkinson, managing director at Derby based Hodgkinson Builders, said: “It was the budget, we more all less expected. I am glad to say there is no reduction in expenditure for infrastructure as that it vitally important for the country.
“I notice the stamp duty incentives are being left as they are for the next couple of years, which is good news for the housing market. My gut feeling is that the housing market will gradually slow down, but won’t completely stop
“I am also pleased to see the day that the Chancellor is helping with fuel costs. Generally that is also very welcome.
“I still think the next couple of years are going to be challenging for everyone though and It is important that inflation and interest rates come down. Let’s all hope this budget does the trick.”
