Sunak reports 2022 aim for UK economy to reach pre-COVID strength in Budget speech

The UK economy is forecast to return to pre-Covid levels by 2022, as annual growth is set to rebound by 6.5% this year, followed by 6% in 2022, according to the Budget Day speech by Rishi Sunak, Chancellor of the Exchequer.

He announced some reform of business rates, supporting industries hardest hit by coronavirus restrictions, such as a new 50% business rates discount which will apply in the retail, hospitality, and leisure sectors, up to a maximum of £110,000.

The NFDA said Sunak has a number of measures in line with requests previously made by NFDA in its spending review submission and consultation response. These include a one-year 50% discount up to £110,000 on business rates for retail, leisure and hospitality businesses and a new improvement relief for investment in green technology.

Additionally, in line with NFDA’s requests: the business rates system will be evaluated every three years; the Valuation Office Agency will receive a substantial increase in funding and next year’s Business Rates Multiplier will be cancelled.

Sue Robinson commented: “NFDA called for more frequent business rates revaluations, a review of the multiplier as well as an extension of the Business Rates Discount: it is extremely positive that the Government has taken on board all our recommendations.

“The business rates discount will be crucial to continue to support businesses as they complete their recovery. Going forward, we will continue to liaise with the relevant departments to go further in addressing the imbalance between online tax and the rates paid by businesses relying primarily on their physical presence such as vehicle dealerships”.

The £1m Annual Investment Allowance will be extended to March 2023 instead of ending in December as originally planned. Robinson added: “The extension of the Annual Investment Allowance, coupled with the super deduction tax, will continue to support franchised dealers’ investments as they upgrade and improve their premises to meet the evolving consumer demand”.

A planned rise in fuel duty to be cancelled amid the highest pump prices in eight years, to help manage the cost of motoring.

The Chancellor also confirmed increases to the national minimum wage for people over 23 to £9.50 an hour next April, when there'll also be a 1.25ppt hike in National Insurance Contributions, which Robinson warned will "disproportionately affect small and medium-sized franchised dealer groups.

Of less concern is the national minimum wage  rise, which does represent an additional cost for businesses, however she said franchised dealers generally pay the vast majority of their staff above the minimum wage”.