"A Tough Budget for Business" - BCC

Image © Adobe Images

The British Chambers of Commerce has said Budget 2024 has imposed further costs on businesses.

"This is a tough budget for business to swallow but the Chancellor has looked to ease the pain by holding out a promise of better days ahead," says Shevaun Haviland, Director General of the BCC.

The BCC welcomed some protection for smaller firms, but said the increase in employer National Insurance Contributions will place a further cost burden on business.

National Insurance paid by businesses on employee payrolls will rise by 1.2 to 15% and the threshold will be cut from £9100 per annum to £5000.

"That is a £25bn tax rise, proportionally hitting harder those employing lower paid workers. Probably three-quarters or so of the increase will flow through to lower pay," says Paul Johnson, Director at the Institute for Fiscal Studies.

This, coupled with a 6.7% increase in the National Living Wage, means many firms will find it more challenging to invest and recruit in the short term.

Chancellor Rachel Reeves said the hit to firms in the near term provided the framework to provide stability for the economy.

"Plans to raise infrastructure spending, sector-specific business rates relief and additional support for small business will take some of the sting out of the tax rises. And it is encouraging to see full expensing and the annual investment allowance made permanent alongside R&D relief being retained," says Haviland.

He says the Chancellor has also listened to the BCC's request to retain first-year allowances for investments in the North Sea to help provide a just transition to Net Zero.

"Much now rests on the Government’s next steps, with the future benefits outlined by the Chancellor by no means guaranteed. A lot will be riding on the success of the Industrial and Trade strategies, the effectiveness of devolution and public investment in infrastructure to reinvigorate regional supply chains," he adds.