The Spring Budget, recently announced by the UK government, did not meet the expectations of the retail industry. Despite some positive general developments, industry bodies expressed their disappointment over the government’s failure to address key issues raised by retailers. Concerns were raised about the elimination of VAT-free shopping for tourists, the liberalization of Sunday trading hours in major shopping districts, and the problem of business rates.
On a positive note, Chancellor of the Exchequer Jeremy Hunt announced that the Office for Budget Responsibility (OBR) predicted a decrease in inflation in the UK. The OBR projected a decrease from 10.7% in the final quarter of the previous year to 2.9% by the end of 2023. This forecast was based on the Bank of England’s interest rate hikes and other measures implemented over the past year. Hunt also stated that the OBR predicted no recession for this year, with a projected 0.2% contraction followed by 1.8% growth in 2024.
Several budget measures were introduced to benefit consumers, including childcare support, a reduction in the cost of alcoholic beverages in pubs to encourage socializing, efforts to keep energy bills low, and freezing fuel duty. For businesses, there were plans for new investment zones and other measures to boost investment. The budget also aimed to support eco-based growth and reduce paperwork for international traders. However, the Corporation Tax continued to rise.
Despite these measures, experts in the industry expressed their overall disappointment. Dee Corsi, CEO of the New West End Company, voiced disappointment over the lack of reconsideration on Sunday trading hours and the negative impact of introducing VAT on spending by international visitors. Helen Dickinson, CEO of the British Retail Consortium, emphasized the need for more government action to address regulatory burdens that hinder retail investment.
Furthermore, Dickinson highlighted the missed opportunity to fix issues with the Apprenticeship Levy system, which could have supported training programs for people re-entering the workforce. Although some changes were made to the business rates system in the previous Autumn Budget, further reform is still needed. Martin McTague, National Chair of the Federation of Small Businesses (FSB), criticized the lack of new support for small firms, leaving them feeling undervalued and overlooked.
In conclusion, while there were positive developments in the UK government’s Spring Budget, the retail industry expressed disappointment over the lack of support for key issues. Retailers were hoping for a reversal on the elimination of VAT-free shopping for tourists, liberalization of Sunday trading hours, and improvement in the burden of business rates. Despite measures to support consumers and businesses, industry experts believe that more needs to be done to address regulatory burdens and support small businesses.
Useful links:
British Retail Consortium
Federation of Small Businesses
