Chancellor Rachel Reeves' Autumn Budget has been met with a cool reception from business leaders across the West of England, with many warning it will dampen business sentiment, job creation and investment in the region.
The statement to Parliament on Wednesday, November 26, outlined a series of tax hikes and threshold freezes affecting companies. This move is part of the Chancellor's strategy to address the UK's financial deficit, but it has left many in the South West business community feeling underwhelmed.
Key Budget Measures and Business Reaction
Among the significant announcements was the confirmation that the minimum wage will increase by 4.1% from April, with younger workers receiving a more substantial rise of 6% to 8.5%. The Chancellor also introduced a £2,000 cap on salary sacrifice schemes for pension contributions.
Phil Smith, Managing Director of Business West, described it as a tax-raising budget from a Chancellor under pressure. He stated that businesses would once again feel squeezed by rising costs across multiple areas. Many West Country firms are reportedly still adjusting to the 2024 Budget, which included a hike in employers' National Insurance contributions.
Mr Smith concluded that this Budget is unlikely to shift the dial on business confidence or economic growth.
Sector-Specific Concerns Emerge
The hospitality sector expressed particular concern. The Bristol Hoteliers Association warned that the higher-than-expected wage increase for under-21s offered the sector cold comfort as it heads into the challenging winter season.
Adam Flint, Chair of the association, acknowledged the government's move to permanently lower business tax rates for over 750,000 retail, hospitality, and leisure properties to the lowest rate since 1991. However, he stressed that this measure is not nearly enough to offset the broader challenges.
Peter Jones, Managing Director of Swindon-based HR Dept, echoed concerns about the wage increase, suggesting it could impact recruitment plans and potentially drive up unemployment.
Broader Economic Impact and Verdict
Nick Rogers, Chief Executive of Bristol-based Exacta Technologies, highlighted that while maintaining corporation tax rates was welcome, the freeze on national insurance thresholds and increased tax rates on dividends and savings would add pressure to operational costs.
He criticised the lack of meaningful incentives for SMEs and the complexity of new measures, calling the Budget a missed opportunity for UK business.
Gemma Broadbent, Partner and Head of Corporate at Wiltshire-based Goughs Solicitors, said the measures reinforced the sense that government support for UK SMEs is continuing to erode.
Despite the criticism, some positive elements were noted. Business West welcomed the Growth and Skills Levy, Youth Guarantee, and free apprenticeship training for under-25s. The allocation of funding to the Industrial Strategy for improving transport, housing, and infrastructure was also seen as a positive step.
Helen Wylde-Archibald, Chief Executive of Devon Chamber of Commerce, welcomed the focus on skills and infrastructure but stressed that much more investment is urgently needed in transport and digital connectivity for the county's businesses to thrive.
