12 minute read
Economy
Chamber asks Chancellor
Business leaders in Coventry and Warwickshire are calling on the Chancellor to reveal how firms that are hardest hit by crippling energy costs are going to be supported beyond next April.
In a mid-October statement, Jeremy Hunt stated that a treasury-led review is being launched into what support can be offered with energy bills from April onwards when the current Energy Bill Relief Scheme is set to end.
It was also confirmed that plans to reverse the scheduled 1.25 per cent rise in National Insurance for the next tax year have been retained, while corporation tax will continue to rise to 25 per cent for larger businesses.
Corin Crane, Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said: “While we appreciate that the government has had to act to reassure the markets, once again businesses are being left in limbo and unable to plan for their medium-to-long-term futures.
“Energy bills are one of the biggest worries for many of the region’s businesses, and while we welcome that the government’s recognition that further help is needed beyond April, a lack of detail around any review or when it is likely to conclude with its recommendations, does nothing to ease our concerns.
“Now more than ever, the government should be consulting with businesses from a variety of sectors as part of this treasury-led review so they can truly understand the reality business owners they face on a day-to-day basis, and provide a tailored support package that will help businesses to plan further ahead.”
Shevaun Haviland, Director General of the British Chambers of Commerce, said: “The Chancellor’s buzzword was stability. But what we’ve seen from him is a plan for today and nothing for tomorrow.
“Following the economic turmoil of the last few weeks he had to press the reset button.
“But businesses will be dismayed by the decision that looks set to strip back the energy support for firms from next April. This will be a hammer blow for many who were already worried about how they will survive.
“The government must commit to a full consultation with firms ahead of that cliff-edge to provide some certainty on where any targeted support will go. Energy costs keep business owners awake at night, alongside rising inflation and interest rates.
“Keeping support for the NICs reversal in place will be some relief for hard-pressed firms, but on its own will not be enough.
“The Chancellor has a delicate balancing act to carry out. He must restore order to the markets if he is to prevent further damage to business and consumer confidence. But if he is serious about stability and growth, he must speak to our Chamber Network to truly understand the pressures firms face.
“People run businesses and businesses rely on people. The Government is failing to fully understand that the cost of living and cost of doing business crises are two sides of the same coin. We still need a clear vision on how it will support firms and the communities that rely on them to thrive.
“It must be clear in how it plans to do this, to prove it is serious about helping businesses through the difficult months ahead. Time is of the essence.”
Firms call for economic vision from new PM
Business leaders in Coventry and Warwickshire have called upon the new Prime Minister to offer a long-term vision to allow firms to thrive – and to back a major project for the region.
Rishi Sunak becomes the new Prime Minister after Liz Truss’s resignation last week and the Coventry and Warwickshire Chamber of Commerce has urged him to balance short-term issues with providing a long-term plan.
Corin Crane, Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said: “It has been a tumultuous few months and businesses across the region are hoping for a period of calm and stability. We wish the new Prime Minister well and hope that he can achieve that in the short-term.
“There are so many issues facing businesses right now and his first task will be to reassure companies that they will get continued support with rising energy costs and also that the Government will be able to provide a solution to the problems with recruitment.
“On top of that, businesses across the region want to see a long-term plan that brings investment and growth.
“We have been on a path of short-term fixes over recent years – due to Brexit, Covid and global events – but firms are crying out for a strategy that gives them confidence to invest for the future.
“Part of that has to be reaffirming a commitment to investment in regional infrastructure, including investment zones, because we believe there is an extremely strong case for the Gigafactory development at Coventry Airport to be one. That would be a real game-changer for the whole of Coventry and Warwickshire.”
Shevaun Haviland, Director General of the British Chambers of Commerce (BCC), said: “We would like to congratulate Rishi Sunak on his appointment as Prime Minister.
“The political and economic uncertainty of the past few months has been hugely damaging to British business confidence and must now come to an end.
“The new Prime Minister must be a steady hand on the tiller to see the economy through the challenging conditions ahead.
“This means setting out fully costed plans to deal with the big issues facing businesses; soaring energy bills, labour shortages, spiralling inflation, and climbing interest rates.
“We cannot afford to see any more flip-flopping on policies - the UK’s businesses need a sustainable, longterm economic plan they can believe in.
“The BCC is writing to the Prime Minister to set out the action needed to tackle the main challenges facing business. It is vital we see progress made in these areas to keep doors open and promote investment.
“Firstly, the Government must provide more certainty on the energy support package for businesses and quickly communicate how the system will work from April. Firms need to know what support to expect in the medium and long-term.
“Secondly, they must fix the extremely tight labour market. Without the skilled people to do the jobs businesses need, the economy will stagnate.
“Thirdly, to grow the economy, Government must set out a strategy to boost our international trade and exports.
“People run businesses and businesses rely on people. The new administration must grasp that the cost of living and cost of doing business crises are two sides of the same coin.
“We need a clear long-term vision of how the new Prime Minister will deal with the challenges ahead and create the business conditions that allow firms, and the communities that rely on them, to thrive.”
Fall in unemployment
brings a challenge for businesses
Another fall in unemployment – to its lowest level for nearly 50 years – highlights one of the biggest issues facing firms in the region.
The unemployment rate dropped to 3.5 per cent in the three months to August – the lowest since 1974 – with overall vacancies now standing at 1,246,000.
Corin Crane, Chief Executive of the Coventry and Warwickshire Chamber of Commerce, said: “Falling unemployment has, on the one hand, been an economic success story of the past couple of years particularly when you consider the fears that it would rise severely at the height of the Covid lockdown.
“However, it is proving to be a real drag on growth for businesses in a range of sectors across Coventry and Warwickshire who are struggling to fill the vacancies they have.
“The new Government has adopted a ‘growth, growth, growth’ mantra and businesses will be the driver for that.
“But there are so many issues that are holding companies back from being able to grow and the labour market is one of them. It is an area where reform is needed to help firms to bring in the staff they need to help deliver the growth that everyone wants to see.”
British Chambers of Commerce Head of Research, David Bharier, said: “Once again, today’s data confirms that the UK is facing the tightest labour market in years. Our own research shows that labour shortages are holding back the ability of many businesses to service existing customers and grow.
“Despite a further decrease in the number of job vacancies to just under 1.25m, the overall level remains very high. Businesses are currently facing multiple external shocks, from global supply chain disruption, rampant inflation, and rising interest rates. Labour shortages are yet another issue weighing down on business confidence.
“While the unemployment rate of 3.5 per cent stands at the lowest level since 1974, the increasing economic inactivity rate, now standing at 21.7 per cent, should be a cause for concern, with long-term sickness cited by the ONS as a key driver of this. Average weekly earnings also continue to be outstripped by inflation for workers overall.
“If Government is serious about growth, it needs to get serious about jobs. There are key reforms it should adopt to help ease tightness in the labour market. These include supporting greater business investment in workforce training, adopting flexible working practices, expanding the use of apprenticeships, and a comprehensive reform of the Shortage Occupation List to allow sectors facing urgent demand for skills to get what they need.”
Message taken to Westminster
Businesses in the manufacturing, automotive, construction and engineering (MACE) sectors in Coventry and Warwickshire took their message to Westminster.
Firms from across those industries have been brought together by the Coventry and Warwickshire Chamber of Commerce over the past two years to talk about specific issues that are affecting them.
The MACE group originally met at the start of the Covid-19 pandemic to look at the challenges facing their businesses, such as grappling with the covid guidance which affected many firms who needed their staff at their place of work for their operation to continue.
They continued to meet online and came together for their second face-toface event at HORIBA MIRA this month to discuss ongoing issues such as rising cost, recruitment and overseas trade.
The group – led by the Chamber and including major employers through to SMEs – went to Parliament where they were due to meet MPs and ask for the creation of a new Minister for Manufacturing to enhance its voice at the highest levels of Government.
Ahead of the trip to Westminster, Sean Rose, head of policy at the Coventry and Warwickshire Chamber of Commerce, said: “Just in the last few years we have seen the energy crisis, coronavirus and exiting the European Union which has had an adverse effect on the manufacturing, automotive, construction and engineering sectors.
“Therefore, it is right that the Chamber brings together the leading voices in these sectors to discuss the challenges faced but more importantly the practical solutions that can be presented directly to the government.
“It was very clear from these discussions that the business community wants to get on with doing what it does best but needs the government to clear the red tape that is holding back growth and provide a platform of certainty allowing firms to plan for the future.
“The energy price cap guarantee is a move in the right direction but the uncertainty of it coming to an end in six months' time is just another example of the challenging times businesses find themselves in.
“As a Chamber of Commerce, we will continue to speak up on behalf of businesses throughout our region and ensure that the voice of business is being heard loud and clear by the new prime minister in Number 10.”
Declan Allen, of Horiba MIRA, said: "It was great to host the MACE roundtable event at HORIBA MIRA.
“Bringing business, academic and government leaders together to discuss the economic challenges and opportunities is hugely important. This means we can debate and agree one voice that goes forward to influence policy, strategy and delivery frameworks to build a strong future.
“Yes, we have many challenges but we also have a unique combination of enablers in the Midlands to deliver great products and services to a global customer base. The MACE events help to build key relationships and collaboration.”
Everyone has an interest in rates
John RImmer
Interest rates are on the rise, good for savers, bad for borrowers.
Interest rates have been unusually low since the financial crisis in 2008. This created one of the cheapest ever times to borrow money. This was great news for borrowers but terrible news for savers…until now.
The low rates will no doubt have created some of the most casual approaches to borrowing from those that have not experienced higher interest rates before. Pre financial crisis interest rates peaked at 5.75% in 2007. For those that remember much further back to the previous peaks of almost 15% in the late 80s/early 90s and 17% in the early 80s make the current situation pale into comparison. is high, one of the Bank of England tools at its disposal is to push up rates to try to decrease spending which in turn creates less demand. This happens because people tend to be more cautious when times are hard and try to save rather than spend. As spending decreases, demand for goods and services falls, and the pace of price rises slows thereby reducing inflation. The Bank of England’s target for inflation is 2% and they will adjust interest rates accordingly until we get back to target.
For business owners who rely on borrowing to support their cash flow, be that in the form of overdrafts, loans, asset/debtor finance or credit cards then the cost of that finance will, in turn, rise. This creates a greater squeeze on cash and without proper planning or management can be the straw that breaks the camel’s back.
Whilst we are not monetary policy experts we do understand the pressures that businesses face. If any of your clients are in business and unsure which way to turn next, be that as a result of a lack of cash, disruption in supplies, historic Covid debt, or for any other matter, then please do recommend that they pick up the phone for support on 02476 226839. We always offer a free of charge, without obligation and confidential chat to discuss their position and talk about the options available to them so that we can help them to stay in business and fight another day.
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