Businesses need economic breathing space to recover
- Credit: POOL/AFP via Getty Images
The famous American baseball player and humourist Yogi Berra remarked ‘it’s tough to make predictions, especially about the future.’
Given the circumstances in which we find ourselves these words are just as apt now as they were in the 1940s.
How do we prepare for a post-pandemic world? What will it look like? When will we be able to make plans?
The lists of questions that depend on certainty are never ending. But what we do know, is in order to move forward, our Chancellor, Rishi Sunak MP, is going to have make some very tough decisions.
All eyes are set on the Spring Budget.
Breaking with the autumn tradition of presenting a budget, the Chancellor has opted to use March 3 to outline the plan to tackle the virus and protect jobs, doing so alongside the latest published forecasts from the Office of Budget Responsibility (OBR).
Whatever we might say about predictions, it is possible to predict the OBR report will not make for easy reading. Its reflections of the past 12 months will show the steepest decline in growth for nearly 300 years.
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Its forecast for the future is likely to suggest unemployment will soar and long-term economic growth and recovery are a great many years away.
The challenge before our Chancellor is bigger than since the Second World War, if not the biggest challenge faced since then (Big, Bigger, Biggest)
The decisions taken in early March will make the difference between a swift and effective economic recovery or a slow and painful one.
However, there are reasons to be hopeful. Not least that lockdowns cause artificial downturns.
It is likely, as we saw in July last year, reopening and relaxing the restrictions will cause the economy to surge.
Those who saved during the lockdown months will be keen to spend, others in need of a break will chose a staycation and our local farmers, fishermen and independent retailers can expect to see an increase in demand.
These are not hazy predictions but based on what happened previously being repeated.
To ensure the economic revival is not just some temporary jolt but a longer and sustainable occurrence, the Chancellor should focus on providing the economic breathing space for businesses to recover from the difficulties of the last year.
Allowing them to make as much money as possible, save, pay off debts and reinvest must be the order of the day.
To do so will create new jobs, opportunities, and breathe real, long-term growth into the local and national economy.
So how can this be achieved?
Firstly, extend the business rates holiday to 2022. Last year the Chancellor exempted all retailers from paying business rates for up to March 2021.
Extending the exemption for another year will provide the opportunity for the thousands of businesses linked to the retail sector to recoup some of their losses.
Secondly, continue five per cent VAT for the tourism and hospitality sectors. They are, as I have often stated, a major player in our economy.
With between three and six million jobs directly and indirectly linked to these sectors it will be essential to see they do not fail.
Having led the campaign to have VAT reduced to five per cent, I am now working to push it back to the end of this year.
Finally, end the ease with which second homes are eligible for business rates.
Torbay and South Hams lose millions in council tax receipts from second homes being designated as businesses and therefore eligible for business rates, and in many cases business rate relief.
Undoubtedly many are being run as legitimate businesses but the relaxed rules are an incentive for some not to pay their share of council tax.
Ending this oversight by changing the criteria around the ‘number of days available’ and the ‘actual days let’ to 210 and 110 respectively would be a welcome start.
We all need certainty, from the individual to the business.
The Chancellor has his work cut out for him to deliver such a feat. If he can provide the certainty and an economic landscape to recover, then I believe we will create an economic resurgence that is more productive and beneficial than any tax increase could ever achieve.