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Surrey Chambers of Commerce Reaction to the Budget: Measures Unlikely to Shift Dial on Business Investment

17th March 2023

 

The Chancellor has acted to address the unfilled jobs which are holding back our economy and it is particularly good to see the help on childcare and for over 50s workers, which will encourage people back into the workforce. The plans for full capital expensing are also a step in a right direction to offset the rise in corporation tax. However, the most recent British Chamber survey on investment found that only a fifth of firms were increasing investment and a similar number were reducing it. This budget looks unlikely to change that dynamic. If the UK’s innovative growth industries are to remain competitive on the world stage, then Government must shift the dial further on investment, both within the UK and from overseas.

Energy
Almost half of businesses surveyed told us they will struggle to pay their energy bills from April. They cannot invest when they are fighting to survive. Beyond the £63m of additional support targeted for leisure centres, there is little that will provide comfort to these firms. Once again Government has failed to understand that the energy crisis for businesses and households are two sides of the same coin. Extending the Energy Bills Relief Scheme for households is hugely welcomed, but with reduced support for businesses planned form April, and no sign of further support, many will be reliving the anxiety they were facing a few months back.

As a network of Chambers we included seven energy recommendations in our budget submission, but not one of these has been acted upon today.

Rates
Equally disappointing was that the Government also failed to reform business rates which we have repeatedly called for and which places a significant burden on businesses. We are hearing of eye watering increases in our local area, which could lead to businesses closing. This tax, which kicks in before a single sale is made needs to be changed.

Skills shortages
It is encouraging to see the Migration Advisory Committee’s recommendations on adding five new construction jobs to the Shortage Occupation List have been accepted. More frequent reviews of the system are also good news, but the lack of skilled labour is still having a corrosive effect on our economy. This shift to a new system cannot come fast enough and other sectors facing huge recruitment pressures must be given help as soon as possible.

Trade
Trade was not mentioned once by the Chancellor, yet again he has neglected the significance of exports – which are a big driver of economic growth. While the later announcement on easing some customs procedures is welcome, it doesn’t address the fundamental challenges facing our exporters. The Office for Budgetary Responsibility (OBR) forecasts predict a drop of 6.6% in export volumes in 2023 followed by a further drop of 0.3% in 2024. This would mean two years of lost growth for UK goods and services exports. The UK Government must urgently look to improve our trading conditions with the EU and move heaven and earth to increase take up of preferences in new and existing trade agreements, which many small businesses remain largely unaware of. We are here to support businesses exporting but they need more encouragement from government if we are to hit the levels of exports needed to grow the economy.