Retail and other business organisations have reacted positively to yesterday’s “Britain is open for business” Budget.
The BHF-BSSA Group said there was “a lot of good news here for both individuals and businesses”, while the CBI believed: “This Budget will help businesses grow and create jobs.” The British Retail Consortium was more cautious, but said that Chancellor George Osborne had “the right intentions”.
Amongst the key points was a 1p cut in fuel duty, effective now, a delay of April’s planned rise in duty and a scrapping of the annual 1p above inflation fuel escalator until 2015.
The moves were welcomed by BHF-BSSA Group, which said: “The reduction in duty, deferment of future hikes and the creation of the fair fuel stabiliser are overdue, but nevertheless welcome. Commodity and fuel price driven inflation are bad enough without the government cranking them up through tax increases as it has been doing, so this cut, if small, is sensible.”
Barry Knight, head of retail at Grant Thornton UK LLP saw the fuel initiatives as particularly positive for retailers. “The scrapping of the fuel duty increase will have been top of retailers’ wish list,” he said, “and is at last some good news for the retail community, which is still under tremendous pressure from low consumer confidence, cost inflation and rises in VAT and national insurance.
“High fuel costs hit hauliers, individuals and shops, as when people cut down on journeys they’re also likely to cut down on household goods and other spending which will have an impact on the whole economy.
“The deferring of a fuel duty rise will help online retailers in particular as it will keep delivery costs down,” he added.
The Chancellor also announced that small business rate relief would be extended for a further year: “Good news for those who’ve just received their 2011-12 rates and expected increases in October,” said BHF-BSSA Group. “Many small shops will breathe a sigh of relief over this.”
A cut in corporation tax of 2% and not 1% as planned “will help firms increase investment,” stated the CBI, and the move was also welcomed by BHF-BSSA Group.
“The cut by 2% rather than 1% is right, as is the commitment to further reductions in future years. If Britain is really open for business then entrepreneurs need as little disincentive as possible. In that respect, raising Entrepreneurs Relief, doubling to £10m, is also welcome,” it said.
The Chancellor also announced that the personal tax allowance would rise to a little over £8,000 as of next April, which “will help offset some of the cost of living increases driven by the recent VAT increase and sharply rising inflation”, said the Group.
And Knight said: “This move is absolutely vital for the economy, if not to grow, at the very least to stabilise. Most retailers have experienced a dire first couple of months of the year so any measures taken to lure the consumer out will be welcome.
“The lowering of the income threshold for tax, which will have an impact on close to 25m people’s purses, and putting a lid on further rises in fuel duty could potentially help inject more spending on retail goods.”
At the BRC, director general Stephen Robertson said he looked forward to “the promised reductions in regulatory burdens,” and that “merging income tax and national insurance would be good if it reduced administrative costs for businesses.
“But, while the Chancellor has the right intentions, he should be pursuing a more ambitious timetable.”
The BHF-BSSA Group concluded: “There is a lot of good news here for both individuals and businesses. The questions are whether it all adds up to enough good news in the pocket to counteract the drain of inflation and if it really will drive growth.”
The Chancellor revised his 2011 growth forecast for the economy from 2.1% to 1.7%, and the 2012 forecast from 2.6% to 2.5%.