After just 50 days as Prime Minister, Liz Truss has been replaced by Rishi Sunak and the date of the Autumn Statement has been pushed back by another two weeks to 17 November.
Although he’s wasted no time in reshuffling his cabinet, Mr Sunak inherits an economy that’s teetering on the brink after September’s disastrous mini-budget and its aftermath.
As a consequence of this, on top of other long-standing and emerging problems, Britain finds itself teetering on the edge of financial freefall. This winter, we face the threat of rolling blackouts, mounting expenses, failing services and industrial action. My colleagues and I at Duncan & Toplis are therefore urging the government to put aside ideology and use sensible interventions to avoid an economic catastrophe.
From haulage to retail and agriculture, fuel costs have made the viability of many businesses very challenging and so we’d strongly recommend government intervention to lessen this expense.
We need help training and nurturing talent to overcome the skills shortage across countless sectors. The next generation of workers across the economy needs investment in their skills so that the recruitment crisis doesn’t spiral beyond control.
The public sector, including schools, GP surgeries and hospitals need urgent funding to help them overcome the cost of inflation, energy and pay rises. This would be essential to protect frontline services and avoid irreparable harm to the people these services are meant to support.
This country needs more new homes but homeowners and businesses but high interest rates on mortgages are forcing people out of the market or being forced to pay unsustainable mortgages when it comes time to renew. With mortgage interest rates as high as 6%, the highest we’ve seen for many years, and many construction firms in the house-building chain suffering from increased supply and labour costs, the government must act decisively.
While the construction sector has borne the weight of Brexit and the pandemic particularly well, we are beginning to see growth slowing in the sector. To lessen the impact on house buyers, homeowners, builders and developers, it is essential that sensible economic policy that supports real growth helps interest rates reduce.
With inflation now in double digits at 10.1%, larger energy bills and increasing mortgage payments, it’s only logical that families have less disposable income, but the knock-on effect of this will be far-reaching. This can be seen in the leisure, hospitality and tourism sector which is heading towards one of the steepest declines of any UK sector, as households and businesses prioritise essential services over travel or recreation. Unless this can be changed, consumers will be less able to go out, socialise, treat themselves and, critically, unable to re-inject capital back into already struggling businesses which will make matters worse.
Matters are bad for businesses, but worse for charities which are increasingly being relied on at a time when their costs are rocketing. Much of charities’ reserves is held in investments and so these are vulnerable to the rises and falls in the value of the pound making sound economic decisions critical. While they can complement it, charities can’t be relied on to fulfil the economic and societal responsibilities of government without the essential funding needed to deliver it. While the government is expected to pursue some level of austerity in public spending, frontline services must be properly funded and charities which are providing vital support should also receive more government support.
While we’ve experienced a great deal of uncertainty in the last few years, the level of unpredictability since the start of the Conservative leadership elections this summer and especially since the Mini-Budget has been particularly challenging. Uncertainty is dangerous for an economy and now more than ever, consumers need confidence. The Autumn Statement must clearly lay out any potential tax increases or cuts and let the markets adjust accordingly - but they must be clearly informed for this to be viable. This includes a thorough analysis from the Office for Budget Responsibility.
Much of the damage caused by the Mini-Budget has now been undone, but aside from the cap on energy bills, we’re essentially back to square one as we head toward one of the most challenging winters in decades.
Businesses can’t go on endlessly adapting to an uncertain economy while being promised support that promptly vanishes. We need a consistent, sensible and well considered set of policies which address the real issues people and businesses are facing.
