Amidst the economic uncertainty and volatility, business leaders share their reactions to the spring statement, highlighting the challenges and opportunities it presents.
A Disappointing Lack of Action
While Rachel Reeves aimed for a calm tone, some business owners felt let down by the absence of concrete policy announcements. For those grappling with rising costs, especially in the wake of increased employment taxes, the statement fell short of providing much-needed relief.
The Brewing Industry's Squeeze
Anthony Hughes, owner of Lincoln Green Brewing Company, expressed optimism about the long-term economic forecasts. However, he emphasized the immediate challenges, such as the impact of the employer national insurance hike and a recent tax increase on non-draught alcohol. With inflation still above the Bank of England's target, Hughes noted a decline in footfall and pint sales, attributing it to reduced disposable income among consumers. He questioned the government's narrative of wage growth and falling inflation, stating, "The image she painted is somewhat different to the one I see."
Pubs and the Obscene Business Rates
Hughes, who also operates six pubs, highlighted the ongoing issue of business rates, describing the current system as "obscene." Despite a support package in January, he questioned the effectiveness of the government's policies in addressing the challenges faced by pubs and retailers. He expressed skepticism about the "jam tomorrow" statement, emphasizing the lack of tangible policies to improve the situation.
The Energy Crisis and Metal Manufacturers
Mark Brearley, running Kaymet, a metal tray and trolley manufacturer, emphasized the urgency of the situation for many businesses, particularly with rising energy costs. Industrial energy prices remain significantly higher post-Russia's invasion of Ukraine, and the Iran war poses further threats to oil and gas prices. Brearley shared his own experience of a 58% increase in gas and electricity costs, highlighting the sudden impact of long-term contract renewals. He expressed concern about the lack of immediate relief for smaller companies, especially given the ongoing impact of last year's employment cost increases.
Defence Technology: Awaiting Investment Plans
Andrew Thomis, CEO of Cohort, a defence technology group, welcomed the mention of defence spending but emphasized the need for the long-delayed defence investment plan. With a commitment to increase defence spending to 5% of GDP by 2035, Thomis highlighted the importance of clear direction for future production decisions. He expressed frustration at the current "cash squeeze" and the lack of guidance for the industry to invest and meet the required production rates.
Retailers' Frustration: Rising Rates and Shoplifting
John Jones, running Philip Morris & Son, a department store with a long history, expressed disappointment with the spring statement. He highlighted the impact of rising business rates, which will cost his store thousands over the next three years. Jones emphasized the lack of acknowledgment of the mistakes made by the government on rates, especially when it comes to retailers. He drew attention to the crime epidemic in retail, with shoplifting becoming increasingly accepted, a problem not faced by pubs. With over 5.5 million incidents of shoplifting last year, costing the industry £400 million, Jones felt that the statement should have addressed these issues.
Construction Recruitment: A Cautious Optimism
Brusk Korkmaz, CEO of Hercules, a construction recruitment company, expressed happiness at Reeves' attempt to provide stability. He emphasized the importance of government certainty for businesses to invest in people. While his company has been insulated from the slump in housebuilding, Korkmaz remained cautious, especially given previous government U-turns on projects like the northern leg of HS2. He stressed the need for long-term planning and consistency in investment decisions.
And Here's the Controversial Part...
While some business leaders appreciated the focus on macroeconomic stability, others felt that the statement lacked concrete actions to address immediate challenges. The absence of policy announcements left many feeling disappointed, especially those struggling with rising costs and the impact of government decisions.
So, what do you think? Is the government doing enough to support businesses through these challenging times? Or are they missing the mark? Let us know your thoughts in the comments below!
