The first reactions to Chancellor Rachel Reeves’ spring budget statement are in…
Among her headline statements was a much-previewed £2.2 billion rise in defence spending, paid for by cutting the overseas aid bill, and an extra £1 billion to help get more people back into work.
She also said inflation, which is now back below 3%, was forecast to fall to 2.1% next year.
The Chancellor said she was bringing forward £3.25 billion of investment to deliver reforms for public services in a new transformation fund, designed to bring down the costs of running the government.
She said she was ‘not satisfied’ by the Office for Budget Responsibility’s announcement that it had revised down the UK's growth forecast this year from 2% to 1%.
Telford-based Turas Accountants says today’s Spring Statement will do little to change the mood in the business community.
Owner Helen Columb (pictured) said changes to Employer National Insurance contributions coming into effect on April 6 had dominated the business agenda in recent months and set the tone for the coming financial year.
“The increase in NICs to 15 per cent and the cutting of the threshold at which employers start paying them to £5,000 has cast a long shadow on financial planning for the year ahead, and there was little in today’s statement to change that.
“It obviously makes it more expensive to employ people and has certainly had a chilling effect on growth and recruitment – the very things we need to be encouraging to help the economy move forward.
“Having committed to not raising taxes further in the wake of her November budget, the Chancellor has left herself with little wriggle room, and I think today’s statement reflects that.
“Without economic growth to generate extra revenue for the Exchequer, it has no option but to cut spending on some public services in order to balance the books.”
Chris Sanger, Tax Policy Leader at EY, said: “On tax, it was always unlikely that we’d see any further changes come out of today, particularly given that measures announced last October, such as the rise in employer National Insurance contributions, are yet to come into effect.
"However, what we may hear in the coming weeks are announcements on tax administration and simplification efforts. While not policy changes, these positive steps include consultations on e-invoicing and cost sharing and have the potential to both reduce the tax gap and attract greater investment in the UK.
“The Corporate Tax Roadmap, published alongside the last Autumn Budget, set out to improve the certainty and predictability of our tax regime. The Roadmap provided the foundation for reform, and the Government may now look to develop this document further, delivering on its aims to simplify the UK tax system and create confidence among businesses and investors, for the benefit of the economy.”
Telford-based construction company McPhillips today welcomed the £600 million funding boost for the construction sector – but warned the Spring Statement showed the fragility of the overall economy.
McPhillips managing director Paul Inions (pictured) said today’s statement painted a gloomy picture of the state of the nation’s finances, with spending cuts following the tax and borrowing rises announced in the October Budget.
“Having ruled out tax rises ahead of today’s statement, the Chancellor left herself with little option but to cut public spending if she wanted to stay within her own fiscal rules.
“There is only one way out of her current predicament and that is to do everything she can to help the private sector start to grow. Unfortunately, the rise in employer’s National Insurance contributions which comes into effect next month and changes to employment laws do nothing to help.
“However, the extra £600million of funding to train tens of thousands more skilled construction workers over the next four years is certainly welcomed. If it can deliver on the Chancellor’s promise to train up to 60,000 engineers, bricklayers, electricians and carpenters by 2029 then it will be a big step forward.”
Paul added: “McPhillips runs its own training centre and we know that investment in skills at entry level pays huge dividends further down the line.
“We certainly need this sort of national investment if we are to speed up work on the UK’s infrastructure and build the 1.5million homes the Government has promised in the next five years.”
Wayne Carter, managing director of Fabweld Steel Products (pictured), said the statement failed to address the reality facing businesses at the moment –rising costs for energy, wages and NICs from next month while asking companies to invest in innovation and growth.
“FSP has put a priority on sustainable practices. We're revolutionising the traditionally energy-intensive steel fabrication sector by embedding sustainability throughout our manufacturing processes – but we need a supportive policy environment.
“We'd welcome future measures that recognise and encourage SMEs making these important transitions, ensuring British manufacturers can continue developing environmentally responsible solutions while maintaining competitiveness in global markets."
FSP has invested in solar-powered nitrogen generation and energy-efficient laser cutting technology, allowing it to offer alternatives for infrastructure projects seeking to demonstrate sustainability in their supply chains.
