To rebuild trust, the Chancellor must deliver certainty in the Budget, not more short-term fixes

Sluggish economic growth, higher National Insurance contributions (NICs) hitting employers hard, and reduced investment in skills and staff across the board. The UK economy is suffering from a general feeling of malaise, and trust is being stretched thin between the government and small businesses in particular.

From the off, Labour talked about the ‘fiscal black hole’. Steps to tackle this have been slow to come to fruition, and weak economic growth is evidence of that. As finance professionals and the leading global accountancy body, ACCA understands that economic changes can take time to be felt and realised in people’s pockets and on balance sheets.

What is more worrying is that sentiment has remained negative. Our members have expressed dissatisfaction, and the state of the economy was ranked the number one concern in our recent survey. Businesses are lacking confidence and direction in how to invest or move forward. Consumers can’t plan for the future, such as buying property or other investments, without greater certainty.

This creates stagnation and clutching at the purse strings - ones that the government desperately needs people to loosen.

In ACCA’s letter to the Chancellor, we set out our key recommendations for the Budget, all of which are aimed at creating a UK where it is easy to do business, tax is simplified, investment is encouraged, and workforces are supported.

Our members are experts, working under the bonnet of businesses, giving them a unique insight into the day-to-day workings of the economy and what really needs to be done.

A simplified tax system is a must. HMRC has been failing the business community for years now, and while there has been some improvement, the piecemeal tax landscape of the UK is a recipe for continued complexity.

A tax system overhaul, one that prioritises simplicity, certainty and stability, is badly needed.

Frozen personal tax thresholds are resulting in fiscal drag, pulling more people into tax bands (a move sometimes referred to as ‘stealth tax’).

Personal tax thresholds that don’t move with inflation rates means more low-wage earners, pensioners and potentially vulnerable people are pulled into the net. Not only does this result in relatively little additional revenue for the government, but it also adds more burden to an already stretched HMRC.

Business costs are crippling for many sectors, affecting employers and employees. Hospitality has especially been hit by the triple whammy of higher operating costs, NICs, and wages.

When the cost of doing business is higher, it results in low investment. That means fewer jobs created, and less money invested into existing operations. ACCA’s message is clear: cut business costs or cut growth.

We have a huge skills shortage that needs addressing. The government needs to prioritise helping more businesses access skills and training opportunities. This would strengthen UK productivity, expand workforce participation and in professional sectors such as ours, create higher value jobs that contribute to increased tax revenues.

Most of all, what we want to see from this Budget is certainty. When decisions are made, and stuck to, it gives a clear goal to move towards.

If the Chancellor can be firm in her commitments and make solid decisions for the UK landscape that are aimed at long term growth, it will go a long way toward rebuilding trust.

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Abdul Goffar, Managing Director, and Glenn Collins, Head of Technical and Strategic Engagement, ACCA UK

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