The new government set its stall out to improve efficiency and growth in the economy as a whole, but the Spring Statement and previous Budget have done anything but that – and have created a negative environment for business, with measures such as the increased minimum wage and changes to employer National Insurance contribution rules.
What the Government does not appear to understand is that raising the minimum wage has a knock-on effect, and pushes up pay at all levels.
The NI increase for a firm employing 50 staff would see a net increase in payments amounting to £35,000 per year.
And this comes at a time when spending is certainly already under pressure. We have had the worst first quarter in some years and confidence is down. It is not clear where growth is going to come from.
The machinations of American President Donald Trump have had a major impact on exports and imports. Businesses don’t know whether they are coming or going. The whole world seems to have gone mad in the past few weeks.
In the farming sector, succession planning has been affected by the Government’s changes to Inheritance Tax.
Lamont Pridmore acts for a number of farmers, and we feel that the Government has got its numbers wrong.
Figures put forward by the president of the NFU are considerably different to those put forward by the Government over the number of businesses which will be affected.
A farm is a finite asset, and if 20% of the land has to be sold to pay tax, it is not long before a smaller farm becomes uneconomic.
The accountancy profession is hoping that the Government will come up with a variety of ways to soften the impact of IHT on farm businesses.
In terms of the Labour government taking on Winter Fuel Allowance and disability benefits, it is certainly not what they were expected to do.
But as I said before the election, whichever party got in, the cupboard was bare.
The economy does not have the kind of fiscal headroom which would allow the Chancellor much room for manoeuvre so there are likely to be more spending cuts or tax increases ahead.
And with the growth rate half what it was, things are not looking too clever for two to three years.
More positively, internationally we are still fairly competitive on inward investment, which is a healthy indicator.
There are also plans to spend billions on infrastructure projects including housing, which may help boost the economy in years two and three of the new government.
These are certainly interesting times!
- Lamont Pridmore has offices in Penrith, Keswick, Carlisle, Barrow, Kendal, Whitehaven and Workington. For more information, visit https://www.lamontpridmore.co.uk/
