Richy Rishi: what does the Autumn Budget mean for UK businesses

November 6, 2021

2 min read

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What's going on here?

Rishi Sunak delivered his Autumn 2021 Budget on 27 October 2021 to MPs in the House of Commons, proposing changes to taxation and plans to help the economy recover after the effects of the pandemic.

What does this mean?

The Budget sets the stage for the Finance Bill, where proposals are brought into law. Proposals brought in can be developments of previous budgets, which follow the promises made before elections. This year, Sunak focuses on investments with international impacts, business innovation strategies, regional development, and recovery from the pandemic. The Help to Grow scheme provides small and mid-size enterprises (SMEs) with a 50% software discount up to £5,000 to encourage investment in identifying digital requirements and implementation of tech. The Research & Development tax relief will motivate businesses to invest in top talent and drive development, aided by allocating over £10bn to the development and maintenance of transport.  A higher prediction by Office for Budget Responsibility (OBR) that the economy will grow by 6.5% shows a positive outlook, continuing the freeze on business rates and maintaining a 50% discount on retail, hospitality, and leisure sectors, increasing the minimum wage by 6.6%, and extending a £10m fund to struggling businesses most in need of relief.

What's the big picture effect?

International investments reveal plans to attract highly skilled workers from abroad and provide grants towards relocation schemes and investing in science and technology centres in the US and India. This support provides an incentive for foreign companies to relocate to the UK, which increases competition for both workers and businesses. The Director of Policy at the Institute of Directors believes direct foreign investment favours London and South-Eastern regions. However, the majority of ÂŁ800m Global Britain Investment Fund is being put into the electric vehicle manufacturing and supply chain in the Midlands and North-Eastern England to expand global opportunities across more of the UK.

The Help to Grow scheme is predicted to help 30,000 SMEs to develop strong strategies for long-term development. SMEs have contributed to 50% of annual turnover for the private sector, so the scheme will aid development of employment opportunities, support expansion in industry and business, and contribute to stabilising the economy. The R&D tax relief reduces the cost of innovation, motivating both SMEs and larger corporations to become increasingly competitive, contributing to the R&D target of 2.4% GDP by 2027. The ÂŁ6.9bn investment to improve city regions public transport will incite growth across all sectors, and ÂŁ5bn into the maintenance of roads ensures regional areas are accessible and can continue to develop.

Increasing the minimum wage is positive for individuals who rely on it, however this threatens the recovery of lower-paid sectors like hospitality. Small-scale employers are pressured to meet the higher wage, which may affect their hiring strategies, or force redundancies. The demand for higher wages may also increase prices. The business rates reform has now been delayed for the 5th time, but the 50% discount for sectors most affected by the pandemic will boost cash flow and help the most vulnerable companies from derailing from their Covid recovery. 

Report written by Emma Hooper

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