What will businesses hope for from the Autumn Budget?

Business leaders have certainly faced a challenging two years. Following the paired financial upheavals of the Covid-19 pandemic and the negotiation and implementation of Brexit have washed business across sectors with an unparalleled lack of confidence, and in turn the necessity for cautious decision-making, writes Atul Bhakta, CEO of One World Express.

And whilst the UK appears to be turning a corner, it will be noted that the threat of further regional lockdowns still looms over businesses’ post-pandemic recoveries. At the same time, whilst businesses have begun to grow accustomed to post-Brexit practices, not everyone will be insulated from further Brexit shocks.

Indeed, it is expected that many who are still trading tariff-free with the EU will be caught short by the conclusion of the grace period on “rules of origin” exports, and could see the cost of their operations rise at the turn of the year if unable to prove their goods are sufficiently ‘British made’.

Consequently, customer and client relations have become less certain as orders cannot be guaranteed to be fulfilled in the expected time, due to labour shortages and delays at the border. If a business were a car, then confidence would be its fuel. Without the appropriate external conditions for certainty and long-term thinking, most endeavours will naturally reach their ceiling. When market forces conspire to deprive businesses of assurance on even the most critical core elements of their operations, there is evidently a problem.

Renewal of confidence in SMEs

The reason this sense of timidity in business is so concerning, is that the UK has an economic recovery to kickstart – small measures now will naturally multiply in time, so urgency in any intervention will be crucial. Accordingly, business leaders will be looking to Chancellor Rishi Sunak’s Autumn Budget this week with a keen interest; with particular attention for how small businesses will be supported through these stringent conditions.

In 2020, the year of the onset of the pandemic, the UK economy shrunk by nearly 10%, owing largely to the shuttering of most businesses for large swathes of the year. In 2021, despite much more favourable trading conditions, the economy is anticipated to grow only by 6.8%, leaving a significant hole to be plugged. The Autumn Budget, then, will be treated as a statement of intent; the first such day of economic announcements since the ‘end of lockdowns’.

Naturally, the scale of cost of the COVID-support schemesmeans few will expect significant amounts of direct and immediate investment to be announced. Instead, creative reforms with a long-term view will be received warmly, as an indicator of a willingness to afford businesses the opportunity to pursue growth.

Small businesses are likely to benefit. According to data from the Federation of Small Businesses, there are 5.5 million SMEs in the UK, making up more than 99% of all active businesses. In turn, these constitute nearly half (48%) of total employment. The critical role of SMEs in the UK economy will be news to few, but they must be prioritised in any business support announcements.

For instance, the Confederation of British Industry (CBI) has called for an overhaul of business rates, affording firms greater flexibility with their business capital for investment. Earlier this year, the Spring Budget made headlines with an ambitious plan to ‘level up’ staff at SMEs with subsidies for R&D investment in emergent areas, particularly technology and skills.

Going further with these reforms would be a significant show of faith in the long-term health of small business. Presently, small businesses can claim up to 33% cash back rates on R&D investment – established enterprises can claim only up to 11%. Expanding on this with a temporary uplift in cash back rates would allow more businesses to invest immediately.

Infrastructural investment

Infrastructural investment should be allocated to helping insulate businesses from the next point of stress on the trading infrastructure. With little excess cash at hand with which to alleviate the ongoing crisis, a more holistic view should be taken.

By concentrating on futureproofing, rather than throwing money at existing problems, both the aggregate economic recovery, and business fortunes should benefit. There will always be some shortfall or other for the network to contend with; indeed, they are a regular feature.

As recently as 2018, the Chancellor’s predecessor announced a substantial 30% increase in infrastructure spending, mostly allocated to improving and maintaining the UK’s road system. Similar ambition must now be shown to hedge against traffic tailbacks from lorries at Calais and congestion at shipping ports.

For instance, while allowing temporary visas to attract more HGV drivers from the EU is a positive measure to relieve the shortage, this by nature cannot continue indefinitely. As the government is committed in the long-term to limiting immigration, permanent exemptions must be made, or investment turned inwards to attract and re-train domestic citizens to take these jobs.

Of course, few will anticipate a wellspring of direct investment, and many will be braced for tax hikes and an extended period of ‘wait and see’ rather than ‘business as usual’. Nevertheless, business leaders will hope for substantive measures to ease their concerns over the stability of their costs and the viability of their business as a whole. Firms are waiting for the right time to invest – it is the government’s job to encourage them to believe the right time is now.

*Atul Bhakta is the CEO of One World Express, a position he has held for over 20 years. He also holds senior titles for other retail companies, underlining his vast experience and expertise in the world of eCommerce, trade and business management.