Chancellor Philip Hammond’s Autumn Statement has received mixed reactions from business chiefs and commentators.
Mr Hammond (main picture) announced an extra £2 billion a year for research and development funding, with £23bn to be spent on innovation and infrastructure over the next five years. He also alluded to plans to double UK export funding capacity.
Businesses had another boost with a reduction in corporation tax from 20% to 17% – the lowest in any of the G20 countries. SMEs will also see improved financing options available, as Government plans to unlock £1bn in finance for growing firms.
However, there was bad news with Insurance Premium Tax increasing to 12%, which, many pundits pointed out, would affect the cost of doing business.
The National Living Wage will also to increase from £7.20 to £7.50 per hour from April, and this could leave retailers “feeling the pinch” unless more is done to support the industry, according to accountancy firm Wilkins Kennedy LLP.
“The Government has been under pressure for quite some time to reform the outdated rates system and until they do, many retailers could find themselves worse off,” said Phil Mullis, partner and head of retail and wholesale at Wilkins Kennedy.
“What’s more, the depreciated value of currency has burdened retailers, because they are under obligation to absorb shortfalls and keep their prices low. Now, increased wage rises will leave retailers no choice but to increase prices.
“Unless the Government steps up with a more solid support structure for retailers, these latest wage increases could mean an uncertain future for retailers. It will be interesting to see the long-term effects from the changes and how smaller businesses will benefit.”
On the plus side, the Government also pledged £2.3bn to help provide 100,00 new homes in ‘high-demand’ areas, as well as £1.4bn to deliver 40,000 extra affordable homes.
Commenting on the Autumn Statement, Federation of Small Businesses (FSB) national chairman Mike Cherry (pictured) welcomed government plans to remove £6.7bn from the business rates system, as well as a Rural Rate Relief scheme, which will give small businesses “a tax break worth up to £2,900,” according to the Chancellor.
Plans to set aside more than £1bn in the Budget for digital infrastructure was also praised by the FSB. Cherry said: “We welcome Government responding to our calls to increase investment in local roads and digital connectivity to help rebalance the UK economy.
“We also back the £2bn per year boost for research, development and innovation, plans to improve management skills, the £400m to improve small business finance through the British Business Bank, and the doubling of export finance. The latter is vital as we need to reach new markets in the wake of the Brexit decision.
“But there will need to be stronger fiscal interventions to boost the economy next year, with the prospect of weaker longer-term growth looming,” he added. “Small firms want to grow, export, innovate, recruit and be more productive – and they need to know as soon as possible the framework they will operate in. Today’s moves to tighten conditions for the self-employed must also be followed up with help to give them parity in benefits so that the UK’s army of genuine self-employed people will continue to grow.”
The British Retail Consortium (BRC) has also supported the measures announced in the Autumn Statement, saying they could give added support to the retail industry.
BRC chief executive, Helen Dickinson (pictured), said: “Today’s modest, but targeted, measures by the Chancellor to boost productivity are to be applauded. The new National Productivity Investment Fund has the potential to make a real difference. So, too, do the plans to improve the UK’s connectivity, with funding for digital infrastructure benefiting the entire UK.
“Retailers and other businesses on the high street will benefit from further investment to improve local transport networks. Taken together, these measures should support the retail industry as it seeks to improve its own productivity.”
However, with the Autumn Statement pointing out that public spending was expected to dip from 45 per cent in 2010 to 40 per cent, Dickinson argued that this could mean challenging times ahead for retailers.