The Autumn Budget looms ever closer, September saw a drop in inflation and investments are set to create 38,000 new jobs
With the Autumn Budget just around the corner, we discuss key changes which we suspect may be announced. There was a surprise drop in inflation in September, and good news as government investments are set to create around 38,000 new jobs.
What will the Budget bring?
With the Budget coming on 30th October, speculation is increasing on what changes will be announced. The Chancellor and the Prime Minister have made comments to indicate that the Budget will bring “difficult decisions”.
The Chancellor reported shortly after taking office that there was a £22bn “black hole” in public spending inherited from the previous government. The BBC reported last week that their sources indicated that actually £40bn is needed to avoid real-terms cuts to departments.
There has also been much talk about driving growth in the UK economy, with the International Investment Summit recently aiming to attract investment to the UK.
Will Employers NI increase?
While Labour’s manifesto promised no increases in taxes to workers, the same promise wasn’t made to employers. Employers National Insurance (NI) is the element of national insurance paid by employers based on an employee’s gross pay. It is therefore a tax on employers that isn’t directly felt by employees.
The Prime Minister neatly sidestepped questions in an interview last week about whether the manifesto promise included employers NI. Chancellor Rachel Reeves also confirmed last week that the election pledge not to increase NI for working people related to the employee element rather than the employer element.
Therefore, it looks as though the government are considering this as an option to raise taxes.
What else could change?
By providing this information early, the government look to be preparing the road so that we all expect an increase. However, the actual increase may be less than we fear so that it doesn’t seem like such bad news when it comes to it.
Also, by having an easy headline tax increase to focus on, other welfare cuts and tax rises may not be as easily noticed.
Other areas that seem likely to receive attention in the Budget could include capital gains tax, inheritance tax, fuel duty, and pension taxation, non-domiciled tax status and possibly a gambling tax.
Once the Budget is announced we will keep you updated on the changes. If you have any concerns about how the Budget might affect you, please feel free to get in touch at any time and we will be happy to help you.
See: https://www.bbc.co.uk/news/articles/cj9jdgprv7ko
Surprising drop in inflation for September
The Office for National Statistics (ONS) have reported that their measure for inflation (Consumer Prices Index) fell to 1.7% for September. This is an unexpected reduction and is the lowest inflation has been in more than three years.
Drops in airfares and petrol were the main reasons for the reduction. The Bank of England targets 2% inflation, so this reduction may allow them to cut interest rates further when they meet in November. There is also some expectation that there could now be a second rate cut in December.
The September inflation figure is an important one since it’s normally used to set how much many benefits increase next April. These include Universal Credit, disability benefits, and carer’s allowance. Lower inflation may lead to lower increases in these allowances.
The drop in inflation may be temporary though, as energy prices increased in October, which may swing the picture once again.
See: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest
£63 billion in new UK investments set to create 38,000 jobs
At the International Investment Summit, the UK government announced nearly £63 billion in new investments, which are expected to create 38,000 jobs.
These investments, which span various sectors, are projected to fuel growth across the country. While these investments tend to focus on large businesses and large-scale projects, there could be significant implications for small and medium-sized businesses (SMEs) as these investments roll out.
Renewable energy opportunities
Octopus Energy has committed to investing £2 billion in renewable energy projects, including four new solar farms across the UK.
These solar farms will power up to 80,000 homes and generate business for smaller suppliers and contractors in the construction, maintenance, and energy sectors.
SMEs in renewable energy services, installation, and related fields could benefit from the need for equipment, local expertise, and operational support as these projects roll out.
Additionally, BW Group is proceeding with a £500 million investment in battery energy storage projects, which are expected to help the UK’s shift towards cleaner energy.
These projects, set in Hampshire and Birmingham, may create new supply chain opportunities for small businesses involved in the production or installation of renewable energy components.
Data Centres: A growing sector for small business support
The growing focus on data centres offers further potential. For example, Amazon Web Services has committed £8 billion to expand its UK data centre operations, a move expected to support around 14,000 jobs annually at local businesses.
Businesses involved in construction, facility maintenance, engineering and telecommunications could find new contracts in the data centre market.
For more information on the project investments announced, see: https://www.gov.uk/government/news/record-breaking-international-investment-summit-secures-63-billion-and-nearly-38000-jobs-for-the-uk