“Today I report on a Britain that is growing and paying its way”, Chancellor of the Exchequer George Osborne said early this afternoon.
Aiming to take over the successful German economy in the next 15 years, Osborne said that global expansion and business development is fundamental to 2015’s Budget.
UK economic growth has been forecast at 2.5% in 2015, while 2016 - 2018 hopes to maintain a growth of 2.3%.
Following Retail Gazette’s morning article, ‘What retailers can expect from budget Britain’, we have now compiled a list of key factors that retailers should consider in 2015.
‘Unemployment’ was the buzzword of the day. Osborne argued that by supporting retailers, the job market could be pushed, after unemployment fell by 102,000 between November and January.
Osborne said that a staggering 1000 jobs have been created every day over the last five years and that the government will put £1.8bn towards employment next year. This will provide retailers with a larger talent pool.
In the lead up to the announcement, Prime Minister David Cameron said that with, “inequality down, poverty down - we have created jobs for tens of thousand”.
Retailers in the North of England should embrace the fact that the North overtook the South last year, as it created the most jobs in Britain.
As a result, car manufacturer Jaguar LandRover was given a special mention after it announced a £1.5bn investment in the UK in 2014 and created 1,700 jobs. The successes clearly had positive impacts for employment rates in the West Midlands, which produced a job every ten minutes in 2014.
Following the televised announcement, tweets soon followed with ‘@RBlackmore91’ tweeting:
“Congratulations to the @LandRover_UK & @Jaguar team for their huge achievements in the last 3 years”.
David McCorquodale, UK Head of Retail at KPMG comments:
“In the longer term, with improved infrastructure and transport links, this will bring increased prosperity to a region that has lost a lot over the years such as textiles. With prosperity comes spending and so retailers will eventually flock there – the early birds will get the early worms”.
Business rates will be set in place to protect those genuinely self employed, and the abolishment of filling out annual tax return will mean that retailers can keep track of their finances in a simpler manner - online.
The rate of corporation taxes will be pushed down in the next two weeks, with 1m small businesses having already claimed the new employment allowance, which should leave them with more cash in their pockets.
However, Phil Mullis, an independent retail expert is not certain of how the business rates change will affect retailers, “It is impossible to tell what effect this will have on business” he said, and believes that only “time will tell” whether it will impact the high street.
Predictions were correct and tax avoidance precautions will be put in place to ensure that retailers aren’t escaping charges over the coming months.
Osborne spoke of creating greater ties with China, saying that problems in the Eurozone remind us why the UK needs to link to, “faster growing parts of the world”. This is ideal for retailers such as Victoria Beckham which has announced that it is looking to open further stores in parts of Asia, where the market is thriving.
Though Carl Hasty, Director of SmartCurrencyBusiness.com, is not fully convinced by the move, citing that China is “an exciting market to consider”.
Consumer spending is likely to rise as the national minimum wage is set to increase to £6.70 per hour this Autumn and to over £8 by the end of the decade. This will increase the average household income which is already £900 better off than it was in 2010.
The nation will also be able to earn up to £11,000 before paid tax by 2017, meaning that consumers will have more money to spend. Osborne said that the squeeze on public spending will end a year earlier, and public spending will increase in 2019/20, in line with the economy. This will provide a turn around for the declining high street.
Internet of Things
Vital for retailers in 2015, the government has declared that it is investing in the “Internet of Things”. The move hopes to bring speeds of 100mb per second to all homes across Britain and will assist eCommerce and company beacons in store.
Drinks retailers are celebrating after it was broadcast that there will be reductions in alcohol tax. Beer duty is to be cut for its 3rd year in a row, while cider, scotch whiskey, spirits and wine will also be affected.
In a response to the statement, The Association of Convenience Stores Chief Executive James Lowman, said:
“The reductions in alcohol duty rates are a welcome measure, as alcohol is an important category in convenience stores. With lower duty rates alongside the Alcohol Wholesaler Registration Scheme and renewed focus from HMRC, we are at last seeing progress in tackling the damaging illegal alcohol trade.”
The Budget aims to increase employment and to improve the economy by creating a stable, global economy. Businesses and the high street are fundamental to 2015’s budget, with Osborne emphasising that by backing enterprise “you raise more revenue”.