10 Nov 2024
Local business leaders have responded negatively to the Budget, fearing its impact on companies already struggling to survive.
Steve Bedford, executive director and business advisor for STANTA (St Albans Enterprise Agency), said it looked like a gamble.
“The gamble is that investment in public sector projects will stimulate growth in the private sector. What we do not know yet is whether the private sector will actually contract as a result of the increased costs associated with employment and not be in good shape to respond to opportunities down the line.
“I expect tight margin sectors where employee costs are already high to struggle somewhat and think there is a real challenge for anyone still paying off debt built up during the pandemic.
“The measures look like they could be mildly inflationary and if that proves to be the case that could hold back investment if interest rates creep back up in 2025 rather than falling back.
“If the private sector decides to cut costs rather than invest in growth, the tax take built in the budget might not yield the income anticipated, which could result in an income short fall for the Government.
“In general I would urge the Government to focus on the needs of small business going forward and do what they can to reduce their costs. As the FSB points out at the start of 2023 there were 5.6 million small businesses (with 0 to 49 employees), 99.2 per cent of the total business population and SMEs account for 99.9 per cent of the business population (5.6 million businesses). It is in this part of the economy where dynamism and entrepreneurialism will drive the much talked about growth.”
President of St Albans District Chamber of Commerce, Cheryl Luzet, said: “The Budget will deeply affect businesses that employ a large number of unskilled workers on the minimum wage, who are already suffering with increased costs in other areas.
“It will remain to be seen how many businesses will not survive this increased pressure at a difficult time. Smaller businesses will be more reticent to hire, which will negatively impact growth and the opportunities for employment.
“Many businesses will be forced to pass these additional costs onto individuals through price increases, or a curbing in salary raises. Whilst it might look like the average worker has been protected in this Budget, as increases have been passed onto businesses, they will very much feel the inevitable impact.”
Chamber treasurer Mark Fordham added: “Retaining lower business rates for retail, hospitality and leisure will be welcomed but at a time when businesses are under pressure and many closing down this may not go far enough to support them into the future.
“The rise in employer NICs will significantly impact businesses in the area with many looking to review their investment plans and reduce staff pay rises. Additionally, the decision not to go ahead with plans to move child benefit eligibility to a household income system will leave some families feeling unfairly penalised.”
