The Spring Statement due today will be watched anxiously by businesses up and down the country. It will be the Chancellors opportunity to provide his view of the impact of the war in Ukraine on the economy which is still struggling to recover fully from the pandemic whilst dealing with the ongoing effects of Brexit. It won’t come as a surprise if his forecasts predict inflation increases and reduced growth prospects.
We need UK businesses to invest in growth, but rising operating costs – energy, fuel, payroll - disrupted supply chains, labour shortages and interest rate hikes are all colluding to knock business confidence making it a difficult environment to invest and expand. Pulse Cashflow would like to see the Chancellor support SME’s who are still recovering from the impact of Covid and now face these additional challenges.
The impact of the “cost of living” crisis is causing consumers to carefully watch their spending which is having a knock-on impact on firms struggling to recover from Covid and could end up being detrimental to their future without government support
The Chancellor has a tough job on his hands. It is inevitable that there will be further interest rate increases this year which will drive up the cost of servicing the Governments Covid debt which in turn will dampen his desire to invest in public spending and tempt him to raise taxes but what will be the impact of these moves on consumer spending and ultimately economic growth. Add to that the deafening calls for household support amid the current “cost of living” crisis and you may see it as an impossible job.
Pulse Cashflow are urging the Chancellor to make his Spring Statement “a confidence builder” for businesses to boost economic growth and are urging him to consider:
- short term changes to fuel taxes (VAT and fuel duties) to support those firms with a heavy reliance on fuel
- a windfall tax on energy companies which could be used to fund energy price subsidies to support both businesses and households
- changes to his planned Health and Social Care Levy. Whilst we expect that he will remain committed to the £18bn collective annual increase in national insurance contributions and dividend taxation outlined earlier this year we would urge him to consider ways to protect those on lower incomes. We need the public to have confidence to spend to support our businesses and our economy
- Investment and training initiatives to support firms suffering from labour shortages as a result of Brexit and the mass flight of talent
- Redivert the Super Deduction Tax break to support the reduction of Government imposed overheads. The tax break seems to encourage multinationals to invest but is not an incentive to smaller firms.
- Increase the rateable ceiling value for small business rates relief to £25,000 removing some of the smaller businesses from the system
- steering clear of personal tax changes including CGT and IHT and any muted wealth taxes which will only serve to increase the pressure on consumers
- Doing more to encourage small firms to go green via attractive and easy initiatives
- Take seriously its pledge to end the UK’s poor payment culture by making Audit Committees directly responsible for ensuring best practice within supply chains.
- Simplifying the R&D tax credit system to make it more accessible for small businesses
The Chancellor would have liked to be announcing planned tax hikes, but these could prove damaging to businesses and the economy at this point, and he should be taking steps to protect the most fragile and empower small firms to deliver his ‘culture of enterprise’ vision.