Retail reacts to Autumn 2022 Budget: "Businesses now will be able to sensibly plan ahead"
Britain’s economy is already in recession and set to shrink by 1.4% next year after the fiscal watchdog slashed growth forecasts due to rampant inflation.
The Office for Budget Responsibility (OBR) has said it expected UK gross domestic product (GDP) to slump as it significantly downgraded previous projections that the economy would actually grow by 1.8% in 2023.
The OBR also predicted that inflation will hit an average rate of 9.1% this year and 7.4% in 2023.
In his autumn statement, Chancellor Jeremy Hunt confirmed that new spending reductions and tax plans are intended to help address the UK’s fiscal hole. Hunt told MPs his three priorities were “stability, growth and public services”. He set out a package of £30 billion of spending cuts and £24 billion in tax rises over the next five years.
Key experts across the fashion and retail industry react to his statement:
Helen Dickinson, CEO of British Retail Consortium:
“High inflation remains a major threat to the UK economy and we support the government’s objective of bringing this down. Inflation is making people poorer, damaging consumer confidence and holding back demand. It pushes up the costs to businesses which further increases prices for consumers. As the retail industry enters the crucial Christmas period, it is vital that inflation is brought to heel.”
Looking at business rates and transitional relief, Dickinson added: “The announcements today show the government has heard the concerns of the retail industry. Retailers are working incredibly hard to support customers – expanding value ranges, fixing the prices of essential items, and offering discounts to vulnerable households. This Autumn Statement supports that commitment by reducing upwards pressure on prices in the short term, and helping retailers protect jobs, keep shops open, and protect the vibrancy of local communities.
“The Government has taken an essential step towards longer term reform of the broken business rates system by announcing the scrapping of downwards phasing of transitional relief. This decision means that April’s bills reflect market conditions and retailers will pay only what they owe, rather than being forced to overpay their rates bill when the value of their property has already fallen. This represents the first step towards a more fundamental reform of the broken business rates system.”
John Webber, Head of Business Rates at Colliers:
“It is with massive relief that the government has finally listened to us and other industry bodies about out-of-control business rates rises following the next Revaluation. By removing any downward transition, the government has finally recognised that the business rates system cannot be revenue neutral without causing significant hardship. Rates bills for those in the troubled retail and hospitality sectors should now reflect the economic situation and drop in rents that we have seen in the market. Freezing the multiplier is a big positive, as is capping rates rises. Businesses now will be able to sensibly plan ahead for 2023.
“The Government still needs to stick to its manifesto commitment of reducing the overall burden of business rates- but this is a step in the right direction and is hopefully a new chapter in the relationship with Government and Business going forward. All we can hope for now is the Valuation Office Agency has correctly assessed the values– we will know next week!
“I take my hat off to the Government. This is a major boost to the high street and to businesses in general and a fair appreciation of the economic situation. It shows that our campaign on behalf of business has been worth it.”
Chris Griffin, CEO at Secret Sales
“Despite the budget announcement today, the cost-of-living crisis remains a reality for many and consumer confidence is hanging on by a thread. Like never before political uncertainty is impacting consumer shopping habits, as we saw a drop in conversion rates off the back of Hunt’s previous budget plans and then a subsequent uptick in sales conversions following Truss’ resignation.
“As we digest Hunt’s Autumn budget today, with news such as the threshold for income tax personal allowance being frozen, for the retail industry its important consumers feel supported in the lead up to Christmas and beyond. Shoppers are hitting fight or flight mode and as a result over half (58%) are planning to shop more at discount homeware and fashion brands this year. A trend that we’ve seen at Secret Sales, with a 70% increase in sales like-for-like compared to last year, and one that we expect to continue.”
Tarun Gidoomal, UK GM at online marketplace Ankorstore:
“A staggering 97% of independent British retailers believe the government has not provided enough support amidst the ongoing ‘permacrisis’ of 2022, and that figure has likely risen even further after today’s statement.
“Hunt saying he will ‘soften the blow’ on businesses is not enough, and independent retailers up and down the country need more in order to survive the ongoing ‘permacrisis’ of 2022. If the government fails to extend the Energy Relief Scheme, as was missed out of today’s budget entirely, the majority of independent retailers (89%) believe they will suffer as a result, with almost half of all independent retailers (42%) saying that this would cause them to close or consider closing.
“The closure of so many great independent retailers would have huge and far reaching consequences for the communities who depend on these shops – and the social infrastructure they provide, as well as Britain’s economic recovery out of what is being predicted to be our longest ever recession. We’re calling on the government to revisit today’s budget to offer more for small businesses to create greater stability and to promote growth amongst British high streets. Doing nothing is not an option.”
Kay Buxton, CEO of Marble Arch London BID:
“We are disappointed that the Chancellor has not offered more support to businesses in the hospitality and leisure industry. This sector has had to deal with many challenges over the past few years and is now having to battle with high inflation, soaring energy bills, a global recession and rising cost of living. We felt one area which could have made a huge difference was the reintroduction of tax-free shopping for international visitors.
“The wider economic challenges the world is facing is impacting greatly on the international visitor economy but recent research from the Association of International Retail has found that reintroducing tax-free shopping would have brought in an additional 1.6 million visitors in its first full year.
“The Chancellor has therefore missed a trick through not reintroducing tax-free shopping for international visitors as this would have been a simple way to provide much needed support for not only the retail sector, but hospitality and leisure businesses as well.”
Robert Hayton, UK President at Altus Group:
“This is a budget for the embattled high street where rents have been in decline for a number of years.
“Next April will now level up regions and sector which have fared badly whilst protecting those against exceptionally large increases in tax liabilities. The next part of the puzzle could come as early as next week with the publication of new draft rateable values and then businesses will know exactly their rates bills for next year”