Coming out of the pandemic was meant to be a joyous, world uniting affair. Watching events unfold in the Ukraine has dominated the headlines, and although these events are of great importance and cannot be ignored, the administration of the UK continues with or without our observation.
The Spring Statement, credited by Tim Stanley in the Telegraph to have been “watched globally by dozens”, chuckle is all you can do at the wit and satire of political comment as the document itself makes for depressing reading. This is despite the UK having the highest growth rate in the G7 last year with unemployment forecast to be lower, in every year of the forecast. The country is back to the level of 3.9 per cent of unemployment, the levels experienced before the pandemic.
The tax burden is rising, with some measures on offer to tackle the cost of living but they fall short as they are reputed by the Chancellor to only “offset about a third” of the overfall fall in standards.
Inflation in February hit 6.2 per cent, Mr. Sunak is reluctant to borrow, gaining the funds required from the taxpayer now whilst making promises to make cuts later. This plan is to continue the fall of underlying debt from 83.5 per cent of GDP in 2022-23, to 70.8 per cent in 2026-27. The reasoning is that soaring inflation and interest rates would make further borrowing extremely risky. The point the Chancellor repeatedly makes is to prioritize tax cuts over public spending – a very definite end to the Big State.
The Office of National Statistics tells us that in April 2021, median weekly earnings for full-time employees went up by 4.3 per cent compared to the previous year, meaning that the average person took home £611 per week, or approximately £31,722 p.a. This is the highest growth since 2008, but adjusted for inflation, is still 2.3 per cent lower.
Along with rising energy costs, taxes, and the increase to minimum wage in April – Britain is now facing the highest tax burden in 70 years.
Some pertinent statement points for small business
- 5p cut in fuel duty for twelve months
- VAT reduced from 5% to 0% for homeowners installing energy saving materials over the next five years – but this is not on offer to small businesses.
- Household Support Fund has been doubled to help most vulnerable households with rising costs
- Uprated Employment Allowance for small businesses
- From this July, people will be able to earn £12,570 a year without paying income tax or National Insurance.
- Resolute with levy for National Insurance to further fund the NHS and social fund
The statement specifically mentions that we lag international peers in adult technical skills, UK employers spend half the European average on training their employees. There were also promises for reform in R&D tax credits, and the productivity gap with Germany and France was attributed to the poor performance in capital investment in the UK leading to speculation as to what will be on offer following the end of the Super Deduction
It isn’t entirely grim reading, the cut in fuel duty is welcome. Transport is linked to economic and social health, reducing the cost of fuel reduces the cost of everyone and everything we need to move around. This strategy is also deployed in many other countries facing similar challenges – such as France, Germany, Italy, and Sweden. Japan has introduced a fuel subsidiary, and in America two states have suspended their petrol taxes and a bill has been introduced in Congress to do the same to the federal levy.
Grant Elrick, Sales Director from UK Garage & Bodyshop Event presented by Automechanika “The UK automotive industry is facing many challenges including the national skills gap, the shift to Electric Vehicles and the increase in energy costs – all of which will impact garage and bodyshop businesses in the near future. To prevent businesses in the aftermarket from falling behind, these topics will be discussed in detail at the must-attend national trade exhibition, UK Garage & Bodyshop Event, 8-9 June NEC, Birmingham.”
Visitors can get FREE tickets here