Rishi Sunak’s autumn budget was a clear indication of focus shifting from navigating the pandemic, to recovering from it and repairing the economy. It was also apparent that the Government does not plan to return to the days of austerity seen after the financial crisis and instead will look to spend their way out of the situation.
The economic assessment given was encouraging with the impact of the pandemic not as deep as originally feared. The latest forecast is for the economy to return to pre-pandemic levels in 2022, with strong growth projected for 2021 and 2022.
There were some measures in the announcement to assist certain business sectors, who were worst hit by the pandemic. Hospitality, retail, and leisure businesses will see business rate relief of 50% for 22-23, up to £110k.
More widely there was a freeze on fuel duties, which was welcome, given the significant pressure being felt by all businesses currently.
However, there was little assistance to help with the unprecedented cost pressures that have been seen in the last 12 months. The increase of the national living wage from £8.91 to £9.50, whilst welcome for workers, is going to add significant pressure, particularly for smaller businesses, as they seek to negotiate the impact of this and the previously announced 1.25% increase in national insurance.
There were, however, no further fundamental changes to corporation tax or VAT, following the previous announcement that the corporation tax main rate would increase from 19% to 25% from 2023.
There was also the introduction of lower passenger duties in 2023 for domestic flights, which was consistent with the Government’s aim to better connect the Country and encourage economic recovery, but seems at odds with climate change commitments.
As a business operating in the plastics sector, the budget was a missed opportunity to support innovation and investment in the recycling sector. Although there was an increase in landfill tax, there was little or no headway made to drive this sector and the businesses that are reliant on recycled materials.
In summary, there was good news in the better-than-expected economic outlook presented, but most businesses, who have been through a difficult period of unprecedented cost rises and uncertain trading conditions, are likely to feel the budget does little to help navigate the current challenges.
Rob Atkin, Group Finance Director and IoD Yorkshire & NE Awards Finalist 2021
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