National news headlines from the past few weeks have been dominated by the cost-of-living crisis, with households and businesses uncertain as to how they’ll cope with rising prices as we head into the winter months.
On 23rd September, Chancellor Kwasi Kwarteng announced a mini-budget, with policies including: bringing forward the planned cut in the basic rate of income tax from 20% to 19%, the abolition of the 45% higher rate of income tax in England, Wales and Northern Ireland (which was then reversed), and the reversal of the April 2022 increase in National Insurance.
News then broke that the value of the pound had fallen to a record low against the dollar. The BBC then reported that it had risen to $1.14, its highest level for two weeks, recovering slightly after the initial planned tax cuts worried investors.
But what does mean for the bike and retail industries? Last week, members of the British Independent Retailers Association (Bira) reacted to news of the mini-budget and energy announcements.
Among those independent shops questioned, over half (51%) believed that the most valuable support would come from the cut of energy bills, while no increase in corporation tax was welcomed by 22.4% of those questioned.
Only 4% said they were happy with the proposed reduction of income tax, and 12% said the reversal of National Insurance would provide support. In a similar survey conducted at the end of August before both the Ofgem announcement on energy prices and the mini-budget announcement last week, Bira members revealed they had been ‘preparing for the worst’.
Bira’s CEO Andrew Goodacre said: “Some of the recent measures announced would help independents. However, there are now other factors now in play with higher import prices (due to the declining value of the pound) resulting in higher prices.
“There is also the spectre of much higher interest rates dampening consumer expenditure. A budget designed to initiate growth and restore consumer/ business confidence seems to have had the opposite effect. We do need consumers to continue spending money with independents but with everyone’s budgets getting tighter by the week it remains to be seen what the future holds for the high street.”
There is also a financial statement from the Chancellor on 23rd November to outline medium to long-term plans.
Goodacre said: “Independent retailers are still burdened by business rates. Clearly, we have a Government that wants to do things differently and I urge the Chancellor to completely reform businesses rates and reduce the burden in November.”
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