The UK Spring Statement delivered by Chancellor Rishi Sunak has garnered a mixed response from businesses and consumers. While certain measures were seen as beneficial, there are notable concerns and omissions surrounding the overall tax burden placed on individuals and companies.

One positive aspect of the statement was the cut in fuel duty, providing some relief for consumers facing rising petrol prices. Additionally, the increase in the threshold for national insurance payments is expected to improve the finances of around 70% of wage earners in the short term. However, these gains may be diminished over time due to the impact of inflation.

Despite these smaller-scale measures, the Office for Budget Responsibility (OBR) states that the overall tax burden in the UK remains at its highest level since the 1940s. The OBR also downgraded its economic growth forecast and expressed ongoing concerns about the implications of Brexit.

The absence of announcements regarding business rates, lower VAT rates, and tax-free shopping for tourists has disappointed many. Jace Tyrrell, Chief Executive of New West End Company, criticized the government for disregarding pleas to reinstate tax-free shopping and make it easier for tourists to visit the country. He emphasized the significance of attracting high-spending international visitors to drive economic recovery.

Meanwhile, John Webber, Head of Business Rates at Colliers, expressed disappointment that the issue of business rates, which is a major concern for retailers and high street operators, was largely overlooked in the statement. Although a 50% discount for the retail, leisure, and hospitality sectors was reiterated, it only benefits small businesses. Webber stressed the need for assurance that business rates will reflect current lower market rents when Covid-related reliefs come to an end.

David Jinks, Head of Consumer Research at ParcelHero, raised concerns about the eventual return to full business rates for SME retailers. Despite the announced 50% relief, Jinks described the threat of rates hanging over small businesses as the “sword of Damocles.” He also criticized the planned increase in National Insurance contributions, which could potentially hinder job opportunities and lead to increased unemployment.

While some relief was provided for smaller businesses, such as an increase in the Employment Allowance, there is disappointment regarding the impending return of VAT to 20% from 12.5%. This increase is seen as burdensome for small businesses and could potentially deter consumer spending.

Overall, the Spring Statement received a mixed reception, with both positive measures and notable gaps and concerns. Many SME retailers and manufacturers believe that the most valuable measures are too far in the future, and there is a desire for immediate action, such as canceling the planned VAT increase.

Useful links:
BBC article on the UK Spring Statement
Government website on the Spring Statement