The Spring Statement from the UK Chancellor Philip Hammond has painted a mixed picture for the country’s retail sector.
Delivering his first Spring Statement in the House of Commons yesterday (13 March), Hammond said there had been “solid progress towards building an economy that works for everyone” with growth every year since 2010, and sought to quash the “doom and gloom” about the state of the nation.
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Addressing various issues facing the retail sector, the Chancellor said the Office for Budget Responsibility had upgraded its forecast for GDP growth this year to 1.5%, having put the forecast at 1.4% in November. Private consumption, however, is expected to make a lower contribution to growth this year.
“That will only add to the challenges of the current trading environment,” says Helen Dickinson, chief executive of the British Retail Consortium (BRC). “The industry is undergoing rapid structural change as technology revolutionises the way we shop and operating costs escalate, at the same time as inflation continues to outpace wage growth; eating into consumers’ spending power and keeping overall sales growth low.
“The cumulative effect of these prevailing retail headwinds has unfortunately been highlighted by the recent casualties on the high street, which should re-focus attention to what is going on in retail in the UK at present.”
Despite this, the Chancellor said business rates will now be reviewed every three years, with the next revaluation brought forward to 2021.
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By GlobalDataHe also talked about the implementation of a digital tax as a possible solution to ensure digital giants like Google and Facebook pay their fair share of tax.
Yet Dickinson believes the government needs to look more widely than simply focusing on digital tax, instead looking across all elements of business taxation.
“Given the fundamental questions we now face in a digitally connected and globalised world where tax systems have evolved on a national basis, the Government needs to go further than the current business tax road map, published in March 2016. Specifically, there is a need to re-balance away from input taxes (on things like people and property) and towards output taxes (on profits) as well address other underlying problems with the way that different taxes work. This would attract investment which would lead to greater productivity and improved living standards.”
As one of 18 consultations published by the Chancellor ahead of the autumn budget, Hammond says he is considering a tax on single-use plastics.
The nine-week consultation is expected to look at the “whole supply chain” for single-use plastics, and examine ways to deliver renewable alternatives and recycling opportunities. Interested parties will be invited to suggest how high specific tax rates might be.
Dickinson says the industry needs “a comprehensive strategy which considers all materials and resources and sets out how the Government intends to shift to a circular economy where all resources are valued and reused when possible”.
