The latest Spring Statement has done little to steady the nerves of firms across the UK, with Rachel Reeves declining to introduce fresh measures to ease mounting financial pressures on businesses, according to leading accountancy practice Macalvins, which has offices in Harrow, Rickmansworth and Mayfair.
In calmer circumstances, the Office for Budget Responsibility’s (OBR) Spring Forecast might have provided a measure of reassurance, as would the Chancellor’s decision to leave things unchanged.
Instead, escalating tensions in the Middle East and the threat of a wider US-Israel conflict have cast a long shadow over the figures presented to Parliament.
Tariq Husain, CEO at Macalvins, said: “The Chancellor was clear this would not be a major fiscal event, as promised in Labour’s manifesto. That may suit the Treasury’s timetable, though it does little for businesses dealing with rising costs now and in the near future.
“There were no fresh measures to ease the immediate pressures facing employers, no tax changes to stimulate investment and no additional support for firms exposed to rising input costs. The only comfort was that there were no new compliance requirements or tax hikes to contend with.”
The OBR expects economic growth of 1.1 per cent in 2026, down from the 1.4 per cent forecast in November’s forecasts, before rising to 1.6 per cent in 2027 and 2028. Growth is then expected to fall back to 1.5 per cent each year through to the end of the decade.
However, against that backdrop, businesses are grappling with sharply rising energy prices.
“At a time when conflict in the Middle East is pushing up wholesale gas prices and unsettling global markets, many had hoped for clearer recognition of the risks to the UK economy.
“Higher energy prices feed directly into transport, manufacturing, oil and food supply chains. The impact of such a significant ongoing conflict will eventually show up in inflation and borrowing costs.
“Businesses in London, Harrow, Rickmansworht and Mayfair are already contending with higher employer National Insurance Contributions, increased wage bills, new regulation requirements, tax increases and tighter margins. If energy costs rise again and interest rate cuts are delayed, cash flow will tighten further, creating more difficult decisions for UK business owners.”
The Chancellor used her Statement to highlight the Government’s ongoing trade discussions with India, the US and the EU, reforms aimed at backing entrepreneurs and the £820 million earmarked for apprenticeship reform.
While the Government has consistently pledged to bring down the cost of living, a prolonged conflict in the Gulf would make that objective significantly harder to achieve.
Tariq added: “There is a clear determination from the Government to present a message of stability. The difficulty is that stability at home cannot insulate us from volatility overseas.
“Clients are telling us they need clarity on tax, energy and employment costs to plan with confidence and we agree.”
Tariq continued: “In the absence of new policy support, firms need to take control of what they can. That means stress-testing cash flow against higher energy and financing costs, reviewing pricing strategies, exploring qualifying tax reliefs and revisiting capital expenditure plans to help them get a more accurate picture of what the next 12 months will look like for them.
“Professional advice and early action will make the difference if conditions deteriorate nationally or on a global scale.”
For tailored support on tax planning, compliance and business strategy, contact us.