Business reaction of mini-budget slams ‘irresponsible’ Kwarteng
UK SME’s have been very dismissive of Kwasi Kwarteng emergency mini budget, with some branding it as “Trussmoronics not Trussonomics”.
We have spoken to a number of UK SMEs to get their reaction to the emergency mini budget that Kwasi Kwarteng and Liz Truss hope will see Britain extricate itself from the current financial crisis engulfing the country and return to growth, many of those we have spoken to disagree:
Sacha Lord, Night time economy advisor for Greater Manchester said: No VAT or Business Rate support for Hospitality. Corporation tax cuts are completely useless if businesses aren’t turning a profit, or worse, closed. These announcements will now mean last orders for thousands of Hospitality businesses meaning mass redundancies.
Philip Dragoumis, owner of London-based wealth manager, Thera Wealth Management: “This budget is fiscally reckless. It’s Trussmoronics not Trussonomics. There has been no independent assessment or costing from the Office of Budget Responsibility. If you cut taxes while at the same time spending billions on energy subsidies, and just put the bill onto government borrowing, people will not spend their extra money because they know that the bill is coming further down the line. Extra government borrowing and higher bond yields crowd out growth. Markets will lose confidence in UK assets, bond yields will continue to rise and Sterling will continue to fall. Also, how will less stamp duty help first-time buyers when mortgage affordability is decreasing as interest rates go up?”
Joe Garner, managing director at London-based property developer, NewPlace: “Introducing a cut to stamp duty five weeks prior to the deadline for help-to-buy loans is likely to see a mass surge of last minute transactions, followed by a huge drop-off after the deadline ends. It is irresponsible, populist politics that will likely see house prices increase further and decouple even more from income. It is likely to be the final push on the pump that sees the housing price bubble burst, leaving recent first-time buyers and purchasers in negative equity, whilst speculators swoop in on below market opportunities.”
David Robinson, chartered wealth manager at London-based Wildcat Law: “The removal of the cap on bankers’ bonuses is beyond irresponsible. It’s as if everyone has forgotten why the restrictions were put in place, namely because bonuses were found to be a contributing factor to the banks’ practices that directly led to the Global Financial Crisis. Bonuses promote short-term behaviours and hence risk taking to generate profit as quickly as possible, with no implications for sustainability. As someone who spent years repairing some of the damage done in 2008, it is very concerning that just at the point the banks are back on a stable footing, the government is removing many of the checks and balances put in place to keep them there. Large cash bonuses do nothing to promote stable growth, they simply increase the potential reward for taking risks. Arguments that the accountability rules will prevent this seem very hollow when we look at the almost non-existent enforcement of these rules with regards to senior individuals.”
Scott Gallacher, chartered financial planner at Leicestershire-based independent financial advisers, Rowley Turton: “This was a very aggressive tax-cutting budget from the new Chancellor. In the short-term, taxpayers will welcome those tax cuts, especially given the cost of living crisis. The big question is whether these tax cuts will generate sufficient growth to off-set the tax the Chancellor has given up. It’s a big gamble from Kwarteng and, if it doesn’t come off, it’s one that we could all be paying for for years to come. Fingers crossed he’s right.”
Keith Budden, MD at Hampshire-based IT security firm, Ensurety: “Well, Liz Truss and Kwasi Kwarteng certainly delivered the tax-cutting budget they promised. The elephant in the room is, at a time of increasing interest rates, increasing energy prices and increasing inflation, where have they discovered the eternal forest of magical money trees? This budget is not so much take from the rich and give to the poor, it is give to everyone and saddle the next generation with the cost of financing it all. If Labour had made this budget, few would have been surprised, and Tory MPs would be frothing at the mouth.”
Sam Alsop-Hall, Chief Strategy Officer at Birmingham-based healthcare and NHS recruiter, Woodrow Mercer Healthcare: “The left hand doesn’t know what the right hand is doing. Cutting taxes, raising interest rates, keeping the property bubble going and not investing in public services. It’s a recipe for disaster. No coherent plan or strategy here, just headline grabbing platitudes.”
Lewis Shaw, founder of Mansfield-based Shaw Financial Services: “The ideology is strong in Mr Kwarteng and this is evident in his sweeping tax cuts. With the stamp duty changes that take effect from today, anyone buying up to £250,000 won’t pay a penny in stamp duty land tax and first-time buyers will benefit with the cap lifted from £300,000 currently to £425,000. For aspiring home owners this is great news. Along with this we’ve had income tax cuts and the cancellation of the planned corporation tax rise all of which is intended to put more money into people’s pockets and boost economic activity. It’s certainly a bold and radical plan for growth. Let’s hope the fantasy lives up to reality.”
Olga Sipcenoka, founder of Hertfordshire-based restaurant Per Tutti: “The announcement was definitely an ambitious plan, but we small businesses need immediate action, stability and reassurance so we can make long-term plans and shift out of survival mode. The price guarantee relief scheme for six month sounds promising, but what happens after? The uncertainty is still there, but the can has merely been kicked down the road until the Spring.”
Adrian Kidd, chartered wealth manager at Aylesbury-based EQ Financial Planning: “How is all of this going to be paid for? Fiscally, Friday was a phenomenal event yet the Government is not allowing the OBR to provide an independent forecast. This will worry currency markets, as we need foreign buyers of gilts to pay for these plans. Markets are clearly concerned and it may get worse. The removal of the cap on bankers’ bonuses is more a message we are open for business. This would be better delivered by making the UK a Singapore of sorts, exactly what we needed to do in a post-Brexit world and attract more big businesses to HQ here. It’s what made Dublin a big success for Ireland when it joined the Euro. Yet again, stamp duty is a misdirected use of the cash in the coffers. Why do we continually try to stimulate the housing market? It’s policy error pure and simple. Focus on supply for god’s sake.”
Amit Patel, adviser at Welling-based mortgage broker, Trinity Finance: “The cap on bankers’ bonus being scrapped is the wrong decision at a time when inflation is spiralling out of control. This will push up inflation further as bankers’ spend their money and will leave the ‘ordinary’ citizen even more worse off.”
Serena Aranir, manager at Balham-based The Kebab Company: “What the government has announced is too little, too late. This should have all been done before but yet again they are behind the curve. We needed tax cuts and rates paused for businesses months ago but now many of us have gone bust or are not far from it. Couple this with the rise in raw materials, energy and the staffing crisis, you have a toxic mix meaning it’s no longer viable to run a retail business in this country. It won’t be long before we are back to the 90s with derelict ghost towns. Instead, the Government wasted billions on the wrong things including on unneeded infrastructure changes and under-utilised cycle lanes. This money could have been put to much better use but of course it was wasted and now many business are on the brink of collapse.”
Business reaction of mini-budget slams ‘irresponsible’ Kwarteng