Business community reacts to Chancellor’s statement

Business leaders from across the North-west and the rest of the UK have shared their reactions to the newly-appointed Chancellor’s statement yesterday, which saw Jeremy Hunt roll back on many of the tax cuts and spending promises announced last month by his predecessor.

The emergency statement came in response to volatility in the financial markets that saw the pound drop to historic lows against the dollar and forced the Bank of England to intervene in stabilising UK gilt yields and avert a run on pensions. Markets have reacted favourably to Jeremy Hunt’s reversals of his predecessors announcements, with gilt yields down and the pound returning to pre-mini-budget levels on the evening of the statement; this morning (18th October) the FTSE 100 share index also opened at a week-high.

Business leaders have largely praised the Chancellor’s efforts to restore stability to financial markets. Tony Danker, CBI Director-General commented:

“The instability of recent weeks has paused investment and hit livelihoods, so it was important today that the Government responded to those market concerns.

“In the weeks to come, government plans will need to continue to restore fiscal credibility to give markets and business confidence to invest.

“Once stability is restored, we must plan for economic growth from 2023. That will be the moment to set out a new long term tax regime that will kickstart business investment and ensure the UK is competitive in a changing world.”

Chris Fletcher, Policy & Campaigns Director at Greater Manchester Chamber of Commerce, however, questioned whether markets will have long-term confidence in Liz Truss’ government after a sharp volte face; he said:

 “With only the cut to NICs still intact and fundamental changes to or scrapping of all other measures, the mini-budget has definitely been binned along with a fair proportion of the PM’s credibility and authority.

“From the current Chancellor’s statement it sounds like more cuts are to come to balance the books – one of the main reasons for the markets’ adverse reaction to the original budget – and many will be waiting on further details as to what these look like. With the speed of reaction that we are currently seeing it will be obvious very quickly if this is enough to convince the markets, business and voters that the government really has got control of the economy.”

While recognising the need to restore stability, UKHospitality CEO Kate Nicholls encouraged the Chancellor to do more to support the hospitality sector, one of the industries worst impacted by energy price rises. She commented:

“Given the economic volatility we have seen over the past few weeks, we understand the need for the Chancellor to announce these measures today, designed to deliver stability and restore confidence. I would encourage the Government to work with the UK’s hospitality sector to unlock its enormous potential to support our economy in delivering growth, creating jobs and driving the recovery.

“Prior to the energy crisis, which is proving to be so devastating, the sector was forecast to grow by 3% and there is still a real desire from our dynamic hospitality businesses to return to those levels of growth.

“However, the hospitality sector is so exposed to this crisis and has been devastated by it, which is why the energy support provided by the Government to help weather this storm, remains critically important and will help protect a vital industry. It’s essential that the government continues to work closely with the sector as part of its review into support post-April 2023.

“One area in dire need of urgent reform is the business rates system, which is currently not fit for purpose and places an unfair burden on hospitality businesses. This is particularly pressing now, given the additional costs hospitality businesses will now be facing as a result of the freeze on alcohol duty being scrapped.”

With the Chancellor indicating that further public spending cuts may also be necessary, Zoë Billingham, director of think-tank IPPR North said investment in the region needed to be protected to drive necessary economic growth:

“Promises like the delivery of Northern Powerhouse Rail in full, and investment in our vital public services must not be rolled back. This would be devastating to communities across the North and totally undermine the UK economy.  

“This is the moment for clarity, stability and shoring up commitments that protect the most vulnerable, across the whole country, whilst the wealthiest should step up – we are yet to see such assurances.”