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Gloucestershire Business News

Call for stability after Chancellor's statement

Business leaders in Gloucestershire have called for stability after the government today scrapped almost all of the tax measures it announced in its mini-budget three weeks ago.

New Chancellor Jeremy Hunt announced that the basic rate of income tax will remain at 20p indefinitely, instead of being reduced to 19p.

The cap on energy bills is now guaranteed until April next year, but will then be reviewed.

However, the planned cuts to stamp duty and National Insurance will go ahead.

Mr Hunt said his announcement - which brought forward measures from an economic plan due on 31 October - was designed to deliver confidence and stability.

He is due to address MPs in the House of Commons at 3.30pm.

Ian Mean, Business West Gloucestershire director, said: "In order to grow, business must have stability and today that's almost at zero after some of the most calamitous days of any government in our history.

"Following the sacking of her Chancellor Kwasi Kwarteng on Friday, Prime Minister Liz Truss herself is literally on borrowed time after less than 40 days.

"She could be out of a job within days depending on the reaction of the financial money markets today and the number of her own MPs deciding this week she must go.

"Above everything, our businesses require stability and a feeling of government support as they are faced with huge issues like paying back Covid loans and recruitment, for instance.

"The last thing they wanted was a new Prime Minister and her Chancellor instigating financial chaos. It's alarming the latest policy sacrifice has been to go ahead with a previously scrapped rise in corporation tax from 19 per cent to 25 per cent. It's a disaster for SMEs, the engine room of our economy. This will take 6 per cent off their often thin profit margins and many will now struggle to survive.

"This government's madhouse economics must stop now."

Sam Holliday, FSB development manager for Gloucestershire and the South West, said: "If there is one thing above all that businesses crave it is a stable economy. All they ask for is for the political environment to be calm so they can just get on with doing their jobs to keep themselves and the economy moving forward.

"However, over the past few years with the awful Covid pandemic along with General elections, referendums, prime ministerial changes, leadership elections and more, that feeling of stability has disappeared. It has been a complete and utter rollercoaster.

"The Government has already made a series of U-turns but we hope they will remain fully focussed on delivering promptly their key commitments to help small firms with soaring energy bills and to reverse the hike in National Insurance. Both moves can help calm understandable nerves."

Gloucester MP Richard Graham tweeted this morning, before the Chancellor's statement: "The appointment of Jeremy Hunt as Chancellor to push back most tax cuts, balance the books, stabilise markets and reassure the public about the economic direction - tackling inflation, laying the ground for sustainable growth and a 1 Nation Conservative approach - is absolutely right."

Rob Stokes, head of accounts & audit at accountancy and law firm Optimum Professional Services, which has a Cheltenham office, said: "For smaller businesses, the Government's U-turn should not have too great an impact. If Rishi Sunak's original plan is still being adopted, then those earning taxable profits of below £50,000 will still be paying 19 per cent corporation tax.

"However, for larger or more profitable businesses, the Government's change of heart will certainly add to the turmoil. Those with profits over £250,000 will pay the full 25 per cent and those in between £50k and £250k will pay by increasing amounts. This makes planning and decision-making difficult: if your business is on the cusp of topping profits of £50,000 do you stick or do you go all out for growth? With the current market instability and interest rates rises, this adds complexity to investment decisions where allowances may be significant alongside balancing the business cash requirements

"Changing the Chancellor yet again, regardless of the personalities involved, does nothing to help the stability.

"We are going through challenging times and our message to businesses is always to understand your numbers, using them to build and flex plans to put in place."

Punchline says: "The truth of the matter is the government is broke and we all have to remember that we've gone through Covid and the furlough scheme bailed out thousands of businesses and millions of people and without it we'd have been in a complete mess.

"It was a truly breathtaking moment and it appears to have been forgotten by the great British public. But it needs to be paid for, let alone the war in Ukraine and the additional fuel costs and bills and everything else going on.

"It makes sense that you can't cut taxes. What we need is stability. However, unfortunately here in the Punchline office in a straw poll of the team today, we give Liz Truss a 50:50 chance of lasting the week."

What do you think? Contact mark@moosemarketingandpr.co.uk 

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