MHA Spring Statement reaction: Chancellor’s speech delivers little comfort for business owners

While the Chancellor had already ruled out any major tax changes ahead of today’s statement, SME business owners will feel disappointed there wasn’t a sweet surprise or two to lighten the current gloom.

It would have been unrealistic to expect the government to row back on the employer NIC increases coming in next week, though many would have been holding out hope for an eleventh-hour delay to the introduction of the new rates.

In the end the Chancellor has decided to stick to her self-imposed rules on borrowing and debt, and only one fiscal event per year, by announcing deeper than expected cuts to the welfare system as well as moves to reduce the cost of running the civil service.

The £2.2bn boost to defence spending will undoubtedly provide an economic boost to major companies operating in that sector and their manufacturing supply chains, including in Barrow in Cumbria, which was mentioned specifically by the Chancellor, and other major centres like Samlesbury and Warton in Lancashire. While this is expected to create new jobs, I’m not sure how much that will be felt in the wider economy.

The Chancellor has repeatedly said economic growth is the main priority to improve living standards, but it’s very hard to achieve growth when business owners have little in the way of encouragement to invest and create jobs.

The Trump trade wars, Ukraine situation, and rising government borrowing costs are all mitigating factors, but Ms Reeves’s rules on borrowing and debt, which she again said are non-negotiable, have given her no room to manoeuvre.

One piece of good news from today is that inflation appears to be falling again, coming in lower than expected in February. If it continues to fall back towards the 2% target, it paves the way for further cuts to interest rates that should encourage businesses to invest.

We have to hope by the time Ms Reeves delivers her Autumn Budget, things are looking rosier and the Chancellor has more leeway to make changes that could deliver growth.

In the meantime, business owners need to keep making decisions based on good data and the conditions in their sector, rather than being distracted by macro-economics and geopolitics.