Economy

Retail industry responds to ‘underwhelming’ Spring Statement

In the announcement by chancellor Rishi Sunak in the House of Commons yesterday, he revealed the basic rate of income tax will be cut from 20p in the pound to 19p, and fuel duty will also be cut by 5pm

Both Bira and CBI have expressed disappointment in the chancellor’s Spring Statement, with Bira having declared it is “underwhelmed with the offerings for independent businesses”.

In his speech yesterday, Rishi Sunak outlined a series of measures to help combat the rising cost of living in his latest spring statement, including increasing the national insurance threshold by £3,000 to £12,570.

Also included in the latest measures is a fuel duty cut of 5p per litre, an increase in Employment Allowance for small businesses to £5,000 and the promise to cut the basic rate of income from 20p in the pound to 19p by 2024.

Adding its voice to Bira, The CBI said that the forward steps “are welcome but don’t do enough to tackle the current challenges facing firms”.

Bira’s CEO Andrew Goodacre said: “The Spring Statement is underwhelming for indie retailers with limited help on rising costs to business. Whilst we support cuts in fuel duty and an increase in NI allowance, this is nowhere near enough to offset 300% increases in energy, 100% increase in rates and double digit increases in the cost of employment. The 1p cut in income tax is a classic diversionary tactic designed to hide a statement which is short on support for business.

“Increases in product costs are easier to pass on to consumers, but these rising overhead costs are not, which ultimately mean a very difficult year for small retailers.”

Tony Danker, CBI director-general, said: “His new plan to incentivise business investment from next year is very good news. We stand ready to work with the chancellor on measures essential to transforming productivity such as capital allowances, R&D reforms and a revised apprenticeship levy. These measures lie at the heart of U.K. competitiveness.

“In reality, we cannot wait until October to get growth going. The Government needs to get moving straight away.

He added: “We need concrete plans now on how we get new nuclear, hydrogen and onshore wind investment. We need more EV charging infrastructure deployed this year. We need post Brexit regulation changes that unleash the potential of our health, science and technology sectors.

“The chancellor is right that the government can’t solve every challenge. However, the only enduring response to inflation, energy prices and cost of living challenges is a relentless campaign for economic growth.”

Lee Holloway, retail tax partner at Grant Thornton UK LLP, said: “Whether these measures will be enough though to ease the tension in the retail sector remains to be seen, as not all retailers use these reliefs or indeed have physical stores. With £83bn of debt interest, which is four times as high as last year, and the highest on record, we can see just how under pressure many consumers are.

“A real focus for businesses in this sector should be to utilise all available tax reliefs, review their cash tax payments in more detail than ever and review supply chain and property costs.”

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