Business Leaders Voice Disappointment Over Rachel Reeves' Spring Statement
Business owners across various sectors have expressed widespread disappointment following Rachel Reeves' spring statement, which was notably low on new policy announcements. Amid global volatility, the Chancellor aimed to project calm with a subdued economic forecast, but many entrepreneurs struggling with escalating costs found the lack of concrete measures disheartening.
Key Concerns from Business Owners
Changes to the business rates system are scheduled to proceed from 1 April, yet Reeves offered little relief for companies still grappling with last year's increases in employment costs. Additionally, clarity on the long-delayed defence investment plan, a crucial component of spending promises, remained absent. The Guardian interviewed several business leaders to gauge the impact of the spring forecast on their operations.
Independent Brewer Feels the Squeeze
Anthony Hughes, owner of Lincoln Green Brewing Company in Nottingham, acknowledged that the longer-term economic forecasts sounded encouraging. "As a small business owner you want to believe in this," he said. However, Hughes highlighted that costs have risen due to last year's employer national insurance hike and a recent tax increase on non-draught alcohol, putting his trade in "a continual squeeze."
With six pubs in the East Midlands employing about 80 people, Hughes noted that inflation, still above the Bank of England's 2% target, continues to be problematic. Footfall has declined, and fewer people are buying pints, suggesting reduced disposable income. "People are going out less. That means pubs are quieter, and brewers less able to sell beer," he explained.
Hughes criticised the disparity between Reeves' portrayal of real wage growth and falling inflation and the reality he faces. Business rates remain a significant issue for pubs, despite a support package introduced in January. "The way pubs are rated is obscene," he stated, describing the statement as almost a 'jam tomorrow' approach with insufficient policies to drive improvement.
Manufacturer Grapples with Energy Costs
Mark Brearley, who runs Kaymet, a metal serving tray and trolley manufacturer in London, emphasised that while stability is desirable, many businesses are facing an emergency due to rising energy costs. Industrial energy prices remain 70% higher than before Russia's invasion of Ukraine, with gas prices 60% higher, according to Energy UK. The conflict in Iran could further escalate oil and gas prices, impacting domestic costs.
Brearley reported that his gas and electricity costs surged by 58% last year after renewing a long-term contract, describing the impact as "hitting you all at once like a dam breaking." He acknowledged Reeves' focus on the macroeconomic picture given international turbulence but pointed out that last year's rise in employment costs continues to harm smaller companies. "Thousands of businesses out there have real day-to-day issues, and a lot of our rising costs are a result of government-related decisions," he said, summarising the sentiment as "no news just when we wanted some."
Defence Sector Awaits Investment Plan
Andrew Thomis, chief executive of Cohort, a defence technology group listed on AIM, expressed pleasure at Reeves mentioning defence spending and a new £1bn military helicopter project. However, he stressed the urgent need for the long-delayed defence investment plan, originally due last autumn, which is essential for future production decisions.
Cohort, which employs 1,600 people across sites in Reading, Australia, Germany, and Portugal, requires direction to invest effectively. The UK's commitment to increase defence spending to 5% of GDP by 2035 adds pressure. "A lot of investment is needed if the industry is going to produce at the type of rate required – but if we're going to invest we need direction," Thomis said, noting a current cash squeeze.
Retailer Frustrated by Lack of Support
John Jones, owner of Philip Morris & Son, a department store in Hereford with roots dating to 1845, criticised the statement for lacking substance. "There was just nothing there. It was like watching the same tired old message of blaming the Tories and scoring political points against every other party," he remarked.
Jones highlighted that rising business rates will cost him an extra £9,000 this year, £18,000 next year, and £27,000 the following year, a 46% increase over a three-year revaluation cycle. He expressed frustration that while pubs received rectification for rates mistakes, retailers did not, despite facing similar cost pressures and a shoplifting epidemic. Last year, retailers reported 5.5 million incidents of shoplifting, costing £400 million. "We've got stuff walking out the door every day, which is a problem pubs don't have," Jones said, lamenting the lack of acknowledgment in the statement.
Recruitment Firm Seeks Certainty
Brusk Korkmaz, chief executive of Hercules, a construction recruitment company in Gloucestershire, was "happy" to see Reeves attempt to provide stability, noting that businesses invest in people only when government gives certainty. The firm, which employs 1,700 people and recruits for projects like HS2, has been largely insulated from a housebuilding slump.
Korkmaz appreciated the Chancellor's longer-term economic view, emphasising that inconsistent investment undermines planning. "You've got to think in generations, not years," he said. However, he remained cautious after previous governments withdrew from projects such as the northern leg of HS2. "We don't want them going backwards by delaying or pulling out of any projects," he concluded.
