Shropshire Chamber of Commerce says many businesses will be faced with ‘hugely escalating cost pressures’ following today’s tax-raising Budget.
Chancellor Rachel Reeves outlined a plan to raise more than £40 billion in new taxes – with the business community being asked to shoulder around two thirds of the burden.
Ruth Ross, chief executive of Shropshire Chamber, said: “Confidence is still brittle in our economy, and we needed a Budget which gives Shropshire businesses the confidence to invest, and the ability to thrive.
“There is no doubt that the rise in National Insurance for employers, on the back of the announcement of an above inflation increase in the National Minimum Wage, will put a big dent in profitability and be a big worry to many employers.
“The likelihood is that some of these additional costs are now going to be passed onto customers, which could in turn put pressure on inflation.”
She added: “This is the largest tax-raising Budget in a generation, and businesses – many of which are still struggling to recover from the ravages of the pandemic - are being asked to shoulder the biggest burden.
“I’m concerned that raising the rate and lowering the threshold for employers’ National Insurance will particularly hit Shropshire companies which are employing lower paid workers.
“Combined with the increase in the National Living Wage and other measures associated with the Make Work Pay agenda, many of our businesses will see hugely escalating cost pressures.”
Ruth welcomed some of the announcements in the speech, including a decision to freeze fuel duty – particularly important for rural areas – a tax cut on draught beers to help the pub trade, and business rate relief for the retail, hospitality and leisure industry.
But she added: “We would have liked to have seen a root-and-branch revamp of the business rates system to help our high street traders to compete on a level playing field with online retailers. This is long overdue, and has been swerved again.”
In latest Shropshire Chamber of Commerce quarterly economic survey, businesses warned that tax rises may lead to disinvestment, or low investment in areas such as training.
Overall, the number of Shropshire businesses reporting a rise in domestic sales was down by 8% on the previous three months, with those predicting future sales growth down by 14%.
THE BRITISH CHAMBERS OF COMMERCE VIEW:
Shevaun Haviland, Director General of the BCC, said: “This is a tough budget for business to swallow but the Chancellor has looked to ease the pain by holding out a promise of better days ahead.
“While some protection for smaller firms is welcome, the increase in employer National Insurance Contributions will place a further cost burden on business. This, coupled with a 6.7% increase in the National Living Wage, means many firms will find it more challenging to invest and recruit in the short-term.
“But the Chancellor has looked to off-set the upfront hit on firms by outlining a longer-term framework to provide stability for the economy.
“Plans to raise infrastructure spending, sector-specific business rates relief and additional support for small business will take some of the sting out of the tax rises. And it is encouraging to see full expensing and the annual investment allowance made permanent alongside R&D relief being retained.
“The Chancellor has also listened to our request to retain first year allowances for investments in the North Sea to help provide a just transition to Net Zero.
“Much now rests on the Government’s next steps, with the future benefits outlined by the Chancellor by no means guaranteed. A lot will be riding on the success of the Industrial and Trade strategies, and the effectiveness of devolution and public investment in infrastructure to reinvigorate regional supply chains.
“To build business confidence, it’s crucial that we now see decisive and inclusive action at pace from the Government to unlock the investment the economy sorely needs.”
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