The Consumer
The extension of the energy price cap for an extra three months will do some good in protecting the consumer from additional extra cost of living pressures. With wholesale prices falling this year and the extension lasting to the summer, the hope will be that energy bills will fall back below the cap of c.£2,100 per annum. This will give the retailer some much-needed breathing room, although the accumulative impacts of inflation continue to impact the UK consumer. Although it’s clearly pointing out that the cap was £1,300 a year ago.
Businesses
The UK government has rightly identified the need to drive economic growth through productivity – enhancing the business environment against a backdrop of increasing business deaths, decreasing business births – and insolvencies as high as they have been since the Financial Crisis.
The shift from the super deduction to 100% qualifying capital expenditure will no doubt be helpful for growing businesses in growing sectors – as an example in evolving tech or circular economy sectors. However, there are concerns as to whether it stimulates continued business investment, as its temporary status may bring forward investment rather than add to the total gain - and it is essentially a downgrade in benefits in a challenging, inflationary economy. The extent to which the super deduction has so far driven business investment is difficult to ascertain due to the bounce back in the economy – despite the ambitious OBR forecasts. Expect that the increase in corporation tax will likely impact business investment too – although the Chancellor clearly disagrees.
There has also been a focus on attempting to drive the working population; despite unemployment being at low levels, the number of workers remains lower than pre-pandemic levels.
Levelling Up
The announcement of the new Enterprise Zones aligns with both the existing and new mayoralties – Liverpool City Region, Greater Manchester, South Yorkshire, West Yorkshire, Tees Valley, West Midlands, the North East and the East Midlands will all host Enterprise Zones – focused on life sciences, the creative industry, digital technology, advanced manufacturing and green industry.
The trailblazer devolution deals mean that Mayoral Authorities will be given a single funding settlement – firstly Greater Manchester and Birmingham – similar to England and Wales, and therefore greater power on spending money locally.
