Autumn Statement 2023: Summary & Response

ECONOMY 

• The OBR (Office for Budget Responsibility) says headline inflation will fall to 2.8% by the end of 2024, before falling to the 2% target in 2025. The latest figure for consumer price inflation is 4.6% for October - down from a peak of over 11%. 
• According to forecasts from the OBR, the UK economy is set to grow by 0.6% in the current year and 0.7% in 2024. In 2025, GDP is forecast to rise by 1.4%, and up to 2.0% in 2027. 
• The Government will invest £500m over the next two years to fund more "innovation centres" to help make the UK an "AI powerhouse". 

 

TAX, WAGES AND BENEFITS 

• National Living Wage to rise to £11.44 per hour in April and will be extended to 21- and 22-year-olds for the first time. 
• New state pension increased by 8.5% to £221.20 a week, worth up to £900 more a year 
• Benefits will increase by 6.7%, the inflation rate for September, an average increase of £470 for 5.5 million households in 2024.  
• Employee national insurance will be reduced from 12% to 10% from 6^th January, impacting 27 million people. 
• Abolishment of NI for self-employed people earning more than £12,570 from April, with 8% to be paid on profits between £12,570 and £50,270 - a 1% cut 

 

BUSINESS 

• "Full expensing" tax break - allowing companies to deduct spending on new machinery and equipment from profits – has been made permanent. For every £1 that a business invests in IT, machinery and equipment, they can claim back 25p in corporation tax.  
• 75% discount on business rates up to £110,000 for retail hospitality and leisure businesses extended for another year 
• Duty on hand-rolling tobacco to be increased by an additional 10% above the tobacco duty escalator.  
• Freeze on alcohol duty until 1 August 2024 
• Duty on hand-rolling tobacco to be increased by an additional 10% above the tobacco duty escalator. 

 

What our sector specialists have to say...  

Tony Evans, Head of Pharmacy: 

“The National Living Wage increase to £11.44 along with its extension to 21- & 22-year-olds, whilst a benefit to many, will put even more pressure on pharmacy businesses as they continue to grapple with the flat funding agreed as part of the five-year deal first announced in 2019. As a result, this will place more emphasis on the need for a successful outcome to the 2024/25 funding negotiations to ensure the future viability of pharmacy business.” 

Stephen Owens, Managing Director – Pubs & Restaurants: 

"Yesterday's Budget Statement was a mixed bag for the hospitality sector. Whilst the extension to business rates relief and freeze on alcohol duty are welcome measures that will temper some of the uncertainty in the transactional market, the increase to the national living wage is disappointing news that has been criticised by the sector, as this is going to drive up labour costs and squeeze profit margins."

 

Steve Rodell, Managing Director - Retail & Leisure: 

"Whilst the Autumn statement revealed several positive changes for individuals, the measures affecting the convenience retail sector weren’t as supportive as we had hoped and may move to impact customers in the long run. An effective 10% rise in the national living wage will benefit staff but along with an increase in tobacco duty other increased costs, will create significant added pressure to the bottom line. Undoubtedly, retailers will pass these costs onto customers to maintain profit margins in the challenging economic environment. This could lead to increases in food prices which may drive up inflation again. Many of our clients may wonder whether the business rates relief will impact them so we’ll be looking to provide further clarity on this in the coming weeks.”