Latest updates and stories from Bedfordshire Chamber of Commerce and its Members

Chancellor Rachel Reeves’ Spring Statement, unveiled on 26th March, is a challenging one for businesses across the UK – with some redeeming features.

The overall impression is one of an economy failing to grow and perform, and business – the motor of that performance - being given precious few concessions to fuel it.

As Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), put it in their recent announcement, it’s as if we’re seeing firms “struggle to bloom”. The will is there but the way is lacking.

In this blog, we briefly explore both the gloom and the light on the horizon, and asses the impacts on what we at Bedfordshire Chamber of Commerce hold most dear - thriving local communities with successful businesses and world-class infrastructure at their heart.

Cost pressures: little or no relief

The Statement hasn’t done much at all to ease the constant struggle that many businesses are now experiencing to meet their costs.

Yes, inflation has come in under what many analysts were expecting, and this will certainly have a modicum of positive influence on some of those costs. But as the BCC had already previously pointed out, the dip in inflation isn’t sufficient to rule out further volatility in the near future - and in any case inflation is still a sobering 0.8% higher than the Bank of England’s 2% target.

Any cost decreases that do occur are likely to be cold comfort, as next month is when the Government’s increases to employers’ National Insurance contributions (NIC) will start to bite in earnest.

Couple this with the dual sting of the Employment Rights Bill - the increased labour costs it will inevitably cause, and the lack of clarity from the Office of Budget Responsibility (OBR) around exactly how much these will be - and businesses will continue to face some tough and uncertain times as we move into the summer and beyond.

The impacts: slow growth breeds even slower growth

The concern here is that business in this country could be entering a progressive downward spiral. Cost pressures put a halt to businesses undertaking many of the activities that growth depends on – investment, expansion, recruitment and export.

Even in easier times, no business can afford to stand still. In challenging times, driving the business forward becomes even more critical to offset the effects of negative change. But with spare cash absorbed by tax hikes, this response becomes impossible.

On average, around 15% - 25% of businesses fail in the UK every year. Of those, about 20% of the small businesses fail in the first year, and 60% fail within the first three years.

The Spring Statement certainly seems like it won’t change any of this for the better, and the prospect of a global trade tariff war will almost certainly mean that businesses in some sectors face higher risk of failure than others.

Is there anything to applaud in the Statement?

That said, the Statement is not without positive impacts – although some will make themselves felt quicker than others.

The Chancellor’s decision to prioritise increased defence spending, for example, may be a slow burn in terms of the improved security of the UK, but it could start to make a measurable difference to the country’s well-established defence sector, and its supply chain, much earlier than that.

Investment in construction training, and removal of planning barriers, essentially form a two-speed plan. With the training likely to require a longer lead time, but planning changes possible shorter-term.

Focusing on efficiency and productivity in Government, too, does at least resonate to some degree, since, as Shevaun Haviland also noted, “This is what businesses have to do daily.”

Positive next steps

So, a difficult Spring Statement overall. But this is where the BCC - and we at Bedfordshire Chamber of Commerce, as part of it – now get down to business, as ahead of the Comprehensive Spending Review, we work closely with ministers to ensure they create the right environment for firms to thrive.

For more information on becoming a Bedfordshire Chamber of Commerce member, call our team on 01582 522448 or visit www.chamber-business.com.