Here are this week’s highlights in the UK economy.
Hunt announces £13.6 billion support package for business rates payers in England. The chancellor stated the government’s support during his Autumn Statement to help businesses mitigate the impact of rising inflation. The relief is expected to help about 230,000 businesses in retail, hospitality and leisure sectors.
Shoplifting cases rise in UK stores in the year through June. Incidents rose 18% as basic commodity prices have increased. According to Bloomberg, not only are alcohol products being protected today but also some unlikely products such as cheese, butter and laundry detergent.
UK business community will shift away from Conservatives. In a Bloomberg interview, Labour’s Darren Jones announced that business executives are meeting with them. The House of Commons business select committee chair said that the relationship between enterprises and Labour has now changed. The business community is complaining that Hunt has not done enough to help companies survive the cost-of-living crisis.
Retail sales rose by 0.6% in October. After a -15% drop in September, retail sales volumes recovered the following month, exceeding expectations from economists who forecasted only a 0.3% rise, according to a Reuters survey.
Businesses and households will pay more energy costs. Hunt announced that the majority of enterprises will not receive energy subsidies beyond April since the government deems it unsustainable as it reduces public spending in the coming months.
Finanze Business Foresights:
The Financial Times recently featured small business owners trying to cope with soaring interest rates and a looming recession. While most entrepreneurs acknowledged the government’s effort to introduce a relief package, the consensus is that it’s still not enough for them to survive the impact of soaring inflation.
For those who pay themselves through dividends, Hunt announced that the tax-free dividend allowance will be cut to only £500 by April 2024, down from £2,000. The allowance was originally set at £5,000 when it was first introduced in 2016.
Much of the plans outlined during Hunt’s Autumn Statement were unfavourable to business growth, according to many groups. For instance, thousands of small and medium enterprises will be affected by the freeze in the VAT threshold, which will compel them to pay more taxes. In addition, capital gains tax exemption will be reduced to just £6,000 from £12,300 next year, and to £3,000 starting April 2024. Companies will also have to pay 13.8% in National Insurance Contributions on workers’ earnings over £9,100 annually. Finally, the National Living Wage will rise by 9.7% beginning in April 2023.
However, Hunt also offered relief to enterprises such as extending the business rates relief support and increasing it to 75% up to £110,000 per business. Keeping the standard multiplier at 51.2% and the small business multiplier at 51.2% will benefit thousands of enterprises in the country.
But the truth still holds: employment costs will definitely rise even with the business rates relief is increased. Sunak and Hunt have more to do to lift the economy from its current level.
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