Spring budget 2024: Executive summary

Everything you need to know about the budget – at a glance

In what is likely to be his last budget, the Chancellor gave us a statement that was business-lite, preferring to concentrate his limited fiscal headroom on initiatives that will reward individuals (better known as voters). The few benefits and incentives for UK SMEs were either minimal, extensions of extensions, or relied on projections that may not come to pass.

Executive summary:

The Spring ‘24 budget was ‘Going for Growth – the Sequel’, in which the Chancellor offered a repeat of his Autumn tax cut to individuals, extended long-standing alcohol and fuel duty freezes, maintained the windfall tax on energy producers, and revisited the Government’s existing reliance on investment zones and cash incentives for targeted industries to jump start productivity.

It remains to be seen if these initiatives can deliver the growth that the UK needs, as small and medium sized businesses were largely left out of the budget equation – a major error when 99.9% of the business population is concentrated in these groups – leaving many business experts saying that this budget was more political theatre than real economic policy, a carrot for potential voters, and not a realistic plan to rebuild the nation’s productivity and prosperity.

Why is this?

The Chancellor made great show of cuts to personal National Insurance Contributions, raising the threshold for the clawback of Childcare Benefits, championing innovation zones, lifting the VAT threshold and promising to expand full expensing to cover leased assets.

The reality is less rosy: few of these measures will make life easier or better for UK SMEs. Cuts to personal taxes do not necessarily make workers work longer or harder. Cutting childcare benefit penalties is unlikely to encourage many parents to return to work. Innovation zones generally favour large corporations. The lift in the VAT threshold was too small and will still be almost £20k short of where it should be if it had matched inflation since 2017. The expansion of Full Expensing will only occur when fiscal headroom is available – which could be never.

All in all, there were few things to cheer small business owners here. The rise in NLW which lands in workers’ pockets in April, the loss of business rates relief for 220,000 businesses, inflation still twice as high as the BOE target and the problems of Brexit still unfolding are more likely to have SMEs attention.

Kevin Fitzgerald, Managing Director at recruitment firm Employment Hero summed the budget up well: “No rabbits under the Chancellor’s hat today, in what was a frustrating Budget for leaders of small and medium sized businesses. Whilst it is right that the Government focuses on initiatives that will help individuals and household budgets during the current cost of living crisis, the Chancellor has provided little support for SMEs by way of meaningful tax cuts and investment for growth.”

His comments were echoed by Bruce Cartwright. Chief Executive, The Institute of Chartered Accountants of Scotland. “The Chancellor has again failed to offer enough support for small and medium sized businesses (SMEs), which make up 99.9% of UK businesses and are the life blood of the economy.”

Meanwhile: GDP per capita has hovered around 1% for most of the last 15 years…

…and is set to be negative until 2025. Which leaves strong doubts over whether yesterday’s budget can deliver the growth the UK needs.

If you want to learn more about the spring budget 2024, watch our insightful webinar where our founders discuss the impact this budget will have on SMEs.