Firms urge Budget rethink amid warnings of more shop closures and job losses
Rachel Reeves faces ridicule after admitting the economy is ‘stuck’ as businesses urged her to prevent job losses and shop closures.
Storm clouds are gathering over the economy as it was today revealed that the UK now has the highest borrowing costs of any rich OECD country.
The Chancellor was criticised after having declared: ‘Our economy isn’t broken, but it does feel stuck. That’s why growth is our number one mission.’
She was urged to use her Budget to provide respite for firms and to bring down sky high borrowing costs.
Businesses have railed against Labour after it surprised them with a £25billion raid on employers’ National Insurance contributions, alongside increases to business rates, packaging levies and wages.
Just yesterday, B&Q became the latest big name to announce mass job cuts as it proposed reducing its headcount by 672 roles.
Retailers have axed jobs in the wake of last year’s Budget
Retailers to have axed jobs in the wake of last year’s Budget include Tesco and Morrisons.
Julian Jessop, economics fellow at the Institute of Economic Affairs, a free market think-tank, said: ‘The UK economy is indeed stuck in a “low growth, high tax” trap, but the Government’s own failures to control public spending and restore investor confidence have played a key part.’
Tory spokesman for business, Andrew Griffith, added: ‘If the economy is stuck, there is no doubting who’s been spreading the glue.’
Reeves’ remarks came as she announced a shake-up of business rates, which was welcomed by small firms.
But a report from the British Retail Consortium warned that 400 big shops could close, under Reeves’ wider reforms for the tax.
The group warned that up to 100,000 jobs could be lost, should larger shops be forced to close due to higher taxes.
And it estimated local councils’ business rates receipts from retail would fall by well over £100million a year.
Reeves has been facing mounting pressure from High Street bosses over her reforms, which are designed to level the playing field between bricks-and-mortar businesses and online rivals.
But bosses argue the changes will also hit ‘anchor’ stores that generate footfall for town centres.
Retailers fear around 4,000 shops could be forced to pay higher rates.
Helen Dickinson, chief executive of the British Retail Consortium, said hundreds more shops could ‘disappear’, resulting in ‘emptier high streets, and less revenue for the Exchequer’.
She added: ‘The Chancellor can back families, jobs and high streets this Autumn, by excluding large shops from the new higher business rates tax band.
‘This would not cost the Exchequer a penny, yet would help secure the future of 400 retail stores, and the communities they support, right across the country.
‘But failure to act risks shuttering hundreds more stores, costing jobs, communities and the economy far more in the long run.’
High borrowing costs in the UK have been driven by ‘sticky inflation’, according to new analysis by the Resolution Foundation thinktank.
James Smith, research director at the Resolution Foundation, said: ‘The Chancellor should use her Budget to strengthen Britain’s fiscal position and avoid stoking inflation. The Bank can also help by slowing its sales of gilts in line with achieving the inflation target.’
The calls come a day after giant US drugs group Merck pulled a £1billion investment in a new London research centre, citing ‘the challenges of the UK not making meaningful progress towards addressing the lack of investment in the life science industry.’
Hugh Osmond, the entrepreneur behind Pizza Express, said last night that Labour ‘doesn’t have a scooby as to how businesses work.’
He criticised the National Insurance increases and Labour’s bill to bolster worker rights, saying: ‘The absolute, basic, fundamental key to growth is you want an economy creating more jobs – both things couldn’t be designed in a more targeted way to achieve the opposite.’
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