It is shocking news that inflation continues its upward trajectory reaching 11.1% with no sign of slowing – and research by the British Chambers of Commerce shows that many SMEs find it almost impossible to absorb or pass on rising costs.
While the Bank of England seeks to control inflation through further interest rate rises, this fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption and rising staff costs due to labour shortages.
So, we were looking to see a clear plan from the Chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation. The UK economy otherwise faces a lethal combination of recession and runaway inflation.
The Chancellor has stayed true to his word in focusing on financial stability, growth, public services and targeting support for the most vulnerable in society. But in the teeth of a recession, this statement will not increase business confidence.
Businesses will look at Thursday’s announcements and welcome support with business rates, and retention of the employment allowance, though the reduction in the dividend allowance will impact many smaller firms.
Almost half of businesses tell us they will find it difficult to pay their energy bills once the Government’s Energy Bill Relief Scheme ends on 31 March 2023. The sooner we get clarity on where future support will be targeted the better. We had hoped that there would be a timeline for looking at some of the energy intensive businesses earlier than this. It is good news to hear plans to improve energy efficiency across the economy, but we need to see greater urgency as firms battle with their bills in the here and now.
Windfall taxes are sometimes a bit of a blunt instrument, and it would have been more exciting to see the energy companies coming up with strong investment plans to help people with insulation and to turbocharge our race to net zero by investment in renewable energy.
The Chamber absolutely welcomes the National Living Wage increase, which is a vital support for people during the cost of living crisis, however, it does put more pressure on businesses wage bills, too. It’s not the level of the NLW but the impact it can have on the differentials within the pay structure. It doesn’t come into force until April but with pay negotiations and budgets being set now, this could increase inflationary pressure.
Sizewell C will proceed, and HS2 – of which Staffordshire Chambers has long been an advocate – and Northern Powerhouse Rail have not been cut further. These projects will provide a major boost to regional economies as well as improving national infrastructure and we will be working really hard to get more opportunities for local companies to be in these supply chains.
The Government must do more to improve conditions for businesses to invest and grow, otherwise we will be starting from a weak base to power our recovery once global economic conditions stabilise.
The Chancellor’s Statement is light on green innovation, does nothing to talk about how to address current labour shortages and is silent on boosting export led growth.
As always, please let us have your concerns, comments and anecdotal evidence on how all of this is affecting your business via the contact details below or by joining the debate in our Virtual Members’ Lounge.
You may have also seen on our social channels that it is Global Entrepreneurship Week this week. If you have an idea for a business and would like to talk it through contact start@staffordshirechambers.co.uk to speak to one of our experts.
If you want to talk to us about any business issues, including funding, you can call our switchboard on 01782 202222 or call the Stoke and Staffs Growth Hub Helpline on 0300 111 8002 or email: info@staffordshirechambers.co.uk
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