Sensible and stable policy needed, but don’t forget the importance of business confidence

The government must act to stabilise the economy and restore business confidence when the chancellor delivers the Autumn Statement this month, according to one of the region’s leading tax advisors.

Following quickfire and wholesale changes to leadership and economic policy in recent weeks, chancellor Jeremy Hunt will deliver a full Autumn Statement on November 17, his first fiscal announcement with Rishi Sunak as prime minister.

He is expected to announce a combination of tax increases and public spending cuts in a bid to restore public finances.

Colin Abrahams, tax partner at North West business advisory and accountancy firm MHA Moore and Smalley said it was important for the Chancellor to take a balanced approach, combining fiscal responsibility with an identifiable and credible plan for growth. One without the other is unlikely to work, he said.

He said: “Confidence is so important for business and currently it is low. If we keep talking ourselves down, it inevitably becomes a self-fulfilling prophecy.

“In a period of significant uncertainty, we are already seeing businesses holding fire on investment activity. The next two to three months will be crucial in restoring business confidence. The government needs to give people real encouragement and a positive belief that we can work our way through this.”

Colin offered his thoughts on the announcements which could be made by the chancellor on November 17. He said a windfall tax on energy companies would be an ‘easy win’ for the government and did not rule out a further U-turn, restoring the previous National Insurance increase.

He also questioned whether the ‘black hole’ in the public finances is as high as the £50bn figure which is being widely reported.

“With inflation just over 10 per cent but tax thresholds being frozen, tax receipts will likely be much higher as wages have risen in response to inflation and people also move into higher tax bands,” he said.

“I wonder whether the black hole will not be as big as first estimated. It would not surprise me if the government were holding back on what could be positive news to get the maximum political impact from the Autumn Statement.”

MHA Moore and Smalley is an award-winning firm of chartered accountants and business advisors with offices in Preston, Liverpool, Manchester, Blackpool, East Midlands, Kendal, Lancaster and Southport. It has 26 partners and employs over 300 staff.

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