Looking ahead: Chancellor Rishi Sunak is set to unveil his plan for the economy
On Wednesday the Chancellor is unveiling his plan for the economy and we urge him to put business at the core of it.
Earlier this week, a small business leader in Cambridgeshire told us his energy bills will triple from £14K a year to £46K. This small business is doing all it can to ride the storm, but there are many that simply can’t and will be desperately hoping the Chancellor will do something, anything, to give them enough breathing space to get through the coming months.
There is a ‘cost of doing business’ crisis and a business-as-usual approach is not going to cut it; however we are not in that world anymore.
Around the country, businesses are being crushed under the weight of soaring energy bills, price spikes in every conceivable raw material, and an intensely squeezed labour market. In January, 3 out of 4 businesses we surveyed told us they were being forced to raise prices, with large proportions pointing to the price of materials, utilities and increased wages as driving factors.
Yet next month the government plans to drop an increase in National Insurance contributions on top of this mountain of cost pressures. This tax rise will come as a knockout blow for some businesses bruised by the ruinous effects of two years of Covid measures. Our latest data shows that, for more than three quarters of almost 5,000 firms, rising inflation is now their number one concern. This is the highest level ever seen since we first asked the question 13 years ago.
As the horrific events in Ukraine have unfolded, they have also brought huge economic consequences, from massive spikes in gas prices to the cost of metals like steel and nickel going through the roof.
While the causes of inflationary pressure may not be the government’s fault, they can still act now and find a way out of this ‘cost of doing business’ crisis.
We know from speaking to our members that there are two things the Chancellor must deliver on Wednesday – he must postpone the National Insurance increase by one year and he must bring forward a temporary SME energy price cap to protect the smallest and most vulnerable businesses from the worst impacts of skyrocketing energy prices.
If these issues go unaddressed then companies will go to the wall, which will in turn lead to job losses, less choice for consumers and even greater pressure on the cost of living, as prices continue to rise. Many firms are the heartbeat of their local communities, and losing them will only damage the government’s vital levelling up ambitions.
Businesses are not asking government to continually prop them up. What these measures will do is give firms a fighting chance of getting through the difficult coming months so that they can come back stronger once conditions have eased.
Business is the engine room of the economy, and if they are offered some protection now they can repay that many times over in the months ahead by providing the growth needed to fill up the Chancellor’s coffers.
The government has done an excellent job in being there for firms throughout the worst ravages of the pandemic, so we urge them not to stop now.
With serious global issues at play, no-one is expecting the Chancellor to work miracles this week, but he can offer hope and give firms the confidence to look towards a brighter future.
