In today’s Budget (3 March) Chancellor of the Exchequer Rishi Sunak stated the economy needs “an investment led recovery”, with the treasury unleashing its full “fiscal firepower” to protect businesses and livelihoods.
He noted the economy is recovering quicker from the pandemic than initially thought, with a return to its pre-pandemic size expected during the middle of this year – some six months earlier than predicted. GDP is predicted to grow by 4% this year, however it will be 3% smaller than had the pandemic never occurred.
The positive news was buoyed by the UK reaching the 20 million milestone of people receiving their first dose of the Covid-19 vaccine.
But what does all this mean for brands? Here are some key takeaways from the Budget.
Reboot for retail
The Chancellor set out a number of measures to reboot business, including a promise to keep VAT at 5% until the end of September, a cut reportedly worth £5bn. After that, VAT will increase to 12.5% for six months and then return to its standard rate by April 2022.
Likewise, in a bid to stimulate the struggling high street the business rates holiday for firms in England will continue until June, with a 75% discount promised after that. The idea is also to reinvigorate high street spending by increasing the cap on contactless payments to £100.
Over £1bn will be set aside to regenerate 45 town centres in locations such as Castleford, Rochdale and Wolverhampton. The government also plans to open applications for a share of £150m to allow people to “take ownership” of local pubs, theatres, shops and sports clubs.
Early grant schemes will come to an end in March, but a new ‘Restart’ grant programme will begin in April to aid businesses in reopening. The scheme will be backed by £5bn in funding, taking total business government grant expenditure to £25bn.
Non-essential retailers, who have been forced to close their doors due to the pandemic, will be eligible to apply for £6,000 per premise. Hospitality and leisure businesses opening later due to restrictions can apply for a boosted grant of up to £18,000.
There will be a ‘Super Deduction’ tax break for companies that invest to expand their business, in hopes this will create more jobs and opportunities. Firms could see their tax bill reduce between 100% and 130% of the initial investment made.
To help pay for the raft of support outlined by Sunak, corporation tax on company profits will rise from 19% to 25% in April 2023, but the rate will be kept at 19% for the 1.5 million companies reporting profits of less than £50,000. This, Sunak noted, keeps the UK as the lowest for corporation tax in the G7.
Support for jobs
To support businesses the furlough scheme is being extended until the end of September, with the government continuing to pay 80% of wages for hours not worked. Businesses will be asked to contribute 10% of wages in July and then 20% in August and September.
To spur more apprenticeships, companies will be offered incentive payments of up to £3,000 for taking on apprentices of any age. Over £126m will be injected to triple the number of available traineeships.
To attract high-skilled migrant workers to UK startups, the government announced an “improved” points-based visa system. This will enable UK businesses to gain the “most promising international talent” in what Sunak called a “radically simplified bureaucracy for high skilled visa applications”.
Looking to the future
To lay the foundations for future green industries, the Chancellor announced a national infrastructure bank will be established in Leeds this spring, with a backing of £12bn from the government to invest across the UK in public and private projects.
The arts, culture and sports sectors will see £700m of funding made available, with £400m going to art venues, £300m being pumped into professional sport and £25m for grassroots football.
Other measures in the Budget include the decision to freeze alcohol and fuel duties for a second year running, with no extra duties being applied to sprits, wine, cider or beer.
Reacting to the Budget, the Advertising Association welcomed the Chancellor’s focus on skills and jobs, adding that businesses in the ad industry are committed to upskilling talent for the changing jobs market and maximising the potential of the growth in digital. The AA also urged Sunak to see the part advertising can play in the UK’s successful recovery, given the sector delivers “£6 back to GDP for every £1 invested”.