Lisa Hooker, consumer markets leader at PwC, said:
“Retail and hospitality businesses had high expectations from this Autumn Budget but, while the Chancellor has delivered in some areas, businesses have been kept waiting in others.
“The 50% business rates relief for small businesses will be welcome. For larger ones, reliefs for property improvements and green investments, and the freezing of the business rates multiplier in 2022/23, will be seen as a start. However, more fundamental reform of business rates will have to wait until the consultation on Online Sales Tax has been completed, although the latter will be dependent on what OECD members including the UK agree.
“While the Chancellor promised little new directly for the High Street, helping museums, galleries and theatres thrive via tax reliefs will help draw more visitors to towns and cities. And pubs will be cheering the reduction in draft beer tax, which will also help shift the balance of power between the on trade and grocery retailers, and compensate partly for the impact of lockdowns. More widely, frozen alcohol duties, reduced tax on cider and prosecco and Small Brewers Relief will benefit entrepreneurial businesses and drinkers alike.
National Living Wage
“The 6.5% increase in National Living Wage, while good news for the consumer, will add to the inflationary cost pressures for retailers, in particular on the many smaller businesses that haven’t already implemented above-National Living Wage pay scales. Investment in retraining, upskilling and numeracy are welcome, but will not relieve immediate labour shortages.
Challenges for retail in lead up to Christmas
“Retailers’ most immediate challenge will be on delivering Christmas. Measures to help recruit more HGV drivers, to freeze vehicle excise duty and HGV road user levy, and to improve conditions through roadside facilities, are all welcome but unlikely to ease the immediate shortages.
“Aside from the headline-grabbing duty reductions in petrol and alcohol, there was little else to cheer for most consumers, although the Chancellor has supported those most in need with the increase in National Living Wage and the reduction in Universal Credit taper. However, if inflation exceeds the 4% predicted, this could quickly undo any increased spending power.
“On the positive, PwC’s latest consumer sentiment research indicates that confidence is still higher than pre-pandemic levels and shoppers are keen to make this Christmas extra special. Retailers will be hoping that this momentum carries on into the new year.”
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