UK businesses need stability and confidence to invest as Autumn Budget looms, warns manufacturing expert
Amid ongoing speculation, the Autumn Budget must deliver immediate, practical measures to restore business confidence, unlock resources and create real incentives for investment and growth, according to the head of manufacturing at national audit, tax, advisory and consulting firm Crowe UK.
Johnathan Dudley (pictured), who is also Head of SME Corporates, said: “Speculation on what will or will not be in the Budget next week and Whitehall manoeuvring has dominated both the business and political agenda during the past week.
“This is all very depressing for businesses across the UK who are trying to ‘carry on regardless’.
“The fact is that yet another lacklustre quarter of growth, with September itself indicating an actual shrinking of the economy, has almost passed under the radar with the most recent figures attributed to the JLR cyber attack knock-on effect.”
He said there was a desperate need to inspire UK businesses to have the confidence to invest, the resources and the incentive to take the necessary business risks.
“But above all, we must have stability to deliver real growth and avoid failure of the Industrial Strategy that is still just a few months old - a main driver of the government’s growth plan, which has cross-party political support, at least in principle.
“The confidence of business has suffered a series of 'dents' over the last year or so; some geopolitical, some domestic. The impact of tariffs, crippling uncompetitive energy costs, increased employment costs and regulation, have all taken their toll.
“Add to this the impact of cyber-attacks to individual businesses, threat to their supply chains and customers, as well as themselves, and the pressure on many businesses to avoid 'bold' strategic moves is significant.”
He pointed out that many businesses are still struggling to emerge from the scars of the pandemic, if not financially, then in terms of the effects on their people and their supply chains.
And he worried: “Most of all, so many business leaders, especially in the SME sector, are 'weary'.
“There is a feeling of 'falling out of love' with the entrepreneurial spirit that has powered our economy for generations.”
Resources are also a continuing and increasing challenge.
The severe dent to resources suffered by the JLR supply chain in September and October, which continues even now, without assistance will take months or years to restore.
He said: “Inevitably, some businesses may well fail as the traditional 'lean' winter months will be especially tough.
“For those that are able to survive, then the resources called upon, whether via reserves, borrowing or outside investment will be at the cost of what would otherwise be available for investment.
“And businesses trading around this supply chain have an increased risk of bad debt. Credit rating agencies will doubtless act to reflect this increased risk and more cash liquidity will drain away from industry.
“While banks assure us that ‘there is money to lend’ from them, this comes at a cost and in return for security that business owners are very reluctant to provide.
“The scars of the 2008 financial crisis still run deep, for many.
“So unless businesses make the decision to ‘take that call’ from the buying agent that has been pestering them, then decisions on investment, and successful change are either deferred or shelved altogether. However, without investment, then productivity falls back and competitiveness is further challenged.
He pointed out that this could be combatted if the entrepreneurial environment, where commercial risk presented opportunity for reward as the incentive to make positive bold decisions, was there.
“Sadly, the imminent changes to inheritance tax on business assets and significant reductions in CGT tax breaks on future disposals have threatened to discourage entrepreneurs to grow their businesses, at least here in the UK.”
He added that business demands stability. Both fiscally and politically.
He said: “A key example of this was the reaction of the financial markets last week responding to speculation, leaks and speeches concerning the budget content, two weeks before it’s due to be delivered!
“Regardless of politics; what I would really like to see in this budget are real and immediate measures to restore confidence, provide resources, and incentives to invest and grow with the stability of government that will ensure that businesses know the shape of the ‘playing field’ in the medium term.
Crowe UK is running events and engagements across the country on and around Budget day.
