How the Autumn Statement Could Impact Industries

Where his Spring budget was focused on spearheading growth in the midst of an economic downturn and a cost of living crisis, Jeremy Hunt sought a more positive tone for its Autumn counterpart.

The Chancellor said that many of the measures he announced were possible, due to inflation continuing to fall. The reaction to them has varied across industries – with some winners, some losers, and some that sit in between.

In this article, we’ll break down the impact of some of the Autumn statement’s announcements on the UK’s biggest industries, looking at specific policies and the response of trade bodies.

Measures Impacting All Businesses

Of course, there were some measures announced that will affect businesses regardless of what industry they’re in:

National Insurance

From 6th January, the main rate of National Insurance that employees pay will be cut from 12% to 10%, affecting 27 million people. To a worker earning the UK average of £35,400, this will translate to more than £400 a year extra.

Employers’ NI contributions will remain the same.

Hunt also announced a change to National Insurance paid by the self-employed. Class 4 National Insurance for self employed – paid on profits between £12,570 and £50,270 – will go down from 9% to 8% from April. Class 2 National Insurance will be abolished from the same date.

Minimum Wage

The other announcement affecting all businesses was that of the legal minimum wage. It’s currently £10.42 an hour, but that will increase to £11.44 an hour from April. This new rate will also apply to 21 and 22-year-old workers for the first time.

Measures Impacting Manufacturing

Manufacturing was one of the biggest winners to come out of the Autumn statement. One of the main wishlist items for people in the industry was the maintenance of full expensing – where companies can deduct spending on new machinery or equipment from profits, giving them a tax break. They got their wish – with full expensing becoming a permanent feature.

There was also an expansion of the government’s Made Smarter scheme to all of England in 2025, then all of the UK from 2026/7. This includes a focus on digital apprenticeships, giving people the chance to gain the skills that are needed in a rapidly modernising industry. Speaking of modern industries, £2bn is also earmarked for green investment in the automobile industry, and £975m in aerospace.

Measures Impacting Construction

On the other hand, the reaction of the construction industry to the Autumn statement was mixed. BCIS’s chief economist, Dr David Crosthwaite, labelled it as “underwhelming” for the construction industry, due to its lack of detail – and lack of announcements on stamp duty, a major financial drain on the industry.

But that doesn’t mean it was devoid of great things for construction. The Chancellor also announced plans to reform the planning system, meaning planning applications could go through faster.

Melanie Leech, Chief Executive of the British Property Federation, welcomed this, saying that “Two of the biggest blockers to delivering the homes, workplaces and vibrant communities needed across the country are an inefficient planning system and delivery of the right infrastructure, and the Chancellor is right to focus on these as part of a wider plan to boost business investment and stimulate growth.”

Measures Impacting Hospitality

On the surface, hospitality also looks to be one of the big winners of this statement, with the 75% business rates discount for retail, hospitality and leisure firms in England extended for another year and alcohol duty frozen, removing this cost from business owners’ minds in the New Year. However, as UK Hospitality, CEO Kate Nicholls, points out, “The standard multiplier rising by 6.4% will see businesses representing almost two-thirds of the sector’s trade still facing a £150m rates hike.” As such, pressure on prices and inflation will continue, as will higher costs of energy, food, and drink.

Measures Impacting Retail

The country’s top retail industry body, the British Retail Consortium, was scathing in its assessment of the Autumn statement. Its Chief Executive, Helen Dickinson, described retailers and customers as having been “sold out” by the Chancellor’s statement. They drew attention to the decision to increase the business rates standard multiplier, calling it a “flawed tax” that “continues to wreak havoc on our town and city centres.” It did welcome the business rates discount for retail more generally, while pointing out that the measure would have more of an impact on smaller businesses than it would medium and large businesses who provide the most employment and investment.

Closing out his speech, Jeremy Hunt called his latest Statement “an Autumn Statement for a country that has turned a corner”. Not all industries shared his positivity, particularly in the services sector -so its impact is a tapestry of gains and setbacks. The forthcoming months will reveal the true effect of these measures on businesses, employment, and the overall economic trajectory.

No matter what regulations change, Sage software is the best-in-class solution for your business finances. Contact PKF Smith Cooper Systems today on 01332 959008, or use the enquiry form.