New PM announced, what could this mean for business?

James Shipp
Stock image of 10 Downing Street

We have just received the news that Liz Truss will be succeeding Boris Johnson as our new Prime Minister tomorrow, once the procedural formalities are completed by The Queen.

Stock image of 10 Downing Street

The new PM’s inbox will be quite the to-do list with conflict in Europe, a cost of living emergency ahead of us at home and continuing concerns around Northern Irish trade and what seems like ever increasing NHS waiting lists.

From a business perspective there appears to be some good news for companies with a pledge to keep the rate of Corporation Tax at its current level of 19%, effectively cancelling the policy announced by the then chancellor Rishi Sunak to increase the rate for larger companies to 25% next April. The recently applied National Insurance increase is also set to be reversed, adding a little bit more into pay packets and to employers, who were impacted by a rise in Employers National Insurance.

However, it is the impact of her measures to combat inflation, and most specifically energy costs, which will potentially have the biggest impact on employers and businesses as a whole. There is talk of a government funded energy cap being announced this week. The first thing to note is whether this applies to businesses as well as households. Currently the energy cap is domestic only and hence businesses are seeing enormous increases in their costs. Rolling out support measures to assist business too will be expensive but with many employers considering redundancies just so they can afford to pay energy bills, a review of this area is overdue.

The impact on business as a result of a cap on domestic bills should also not be ignored. With fuel costs starting to slowly reduce and some good news from around the world on harvests and the production of food, we could see energy bills being the one remaining significant pressure on the inflation figure over the coming months. Aggressive measures to curb energy costs could see inflation fall rapidly and the pressure on employers to react with high pay increases may fall as quickly as they have arisen.

Time will tell how any new policies change the current dynamic but all we can say is that businesses will be watching with baited breath to see how any new policies will affect them.

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