As the local business community looks ahead to next week’s Autumn Statement, expectations remain low when it comes to a reprieve. One year on from Liz Truss’s seven-week reign, the legacy of Trussonomics remains. We’ve been pushed to the brink of a public debt crisis with everyone bearing the brunt.
Ross Boyd, founder and director of Belfast-based chartered accountants, RBCA, says it’s likely that Hunt will use Wednesday, and last week’s reports of falling inflation, to position the illusion of a road to recovery, but warns we could still be on the road to recession.
He explains, “Hunt will hide behind falling inflation and steadying interest rates, but we’ve only narrowly avoided recession for 2023, and we still have no credible “Growth Plan” to speak of. Inflation is certainly moving in the right direction, but celebration is premature.
“Hunt’s priority next week will be to try to secure voters ahead of the general election and to pre -position the next budget, but the reality is he does not have enough wiggle room to solve the most complex economic climate of a generation. A pandemic, Brexit, and two wars have contributed to a cost-of living-crisis that is hitting everyone.
“Falling inflation doesn’t mean that goods and services are more affordable, it means that prices will rise less quickly than they have been. Let’s remember that over the past two years energy surged by 49 per cent, while food prices rose by almost 30 per cent, and earnings didn’t keep pace. Working people are still facing higher mortgage bills, higher bills, and inflation remains double the Bank of England’s 2 per cent inflation target. The outlook doesn’t look brighter for motorists either with rumours that Hunt will increase fuel duty for the first time in more than a decade, meaning fuel duty could rise to 55p for petrol and diesel.
“Most businesses have been seeing costs go up and sales go down. Locally the business community has been crying out for tangible relief, ideally in the form of Corporation Tax – especially as many are competing with businesses south of the border who may pay as little as 12.5% Corporation Tax.
“Wednesday might not be all bad – falling inflation does mean we’re moving slowly but surely in the right direction – but it isn’t looking all that positive. I can’t see Hunt making any announcements that will be music to the ears of our SMEs and owner-managed businesses – the backbone of our economy here in Northern Ireland – who remain vulnerable to insolvency because of a set of circumstances which have stretched them to the limit. As we know, many retail and hospitality businesses across Northern Ireland have already been forced to shut up shop.
“My advice for businesses remains the same as it has been over recent months – read between the lines – we’re not out of the woods and recession remains a strong possibility for the new year.”