The first thing to say is that the Chancellor has kept her promise that there will only be one Budget a year. Predictions that this would be a mini-Budget were wide of the mark, and that is good news. At the very least this gives businesses a level of certainty that what is announced in the autumn won’t be tinkered with in the spring, allowing them to plan how to deal with those measures, whether they like them or not.
The announcement that the OBR calculates that incomes will rise this year faster than predicted, with the average household finding itself £500 a year better off in real terms (coupled with yesterday’s better-than-expected inflation figures), is important for businesses, especially those consumer-facing operators in the retail, leisure and hospitality sectors, who will be hardest hit by next month’s double whammy of an above-inflation rise in the National Living Wage and an large increase in employers’ national insurance contributions.
If consumers have more money in their pockets, they are likely to be a little less price-sensitive, enabling businesses hard-hit by increased staff costs to pass on at least some of those extra costs in the form of price rises. The prediction means that consumer-facing businesses can afford to be a little braver when it comes to flexing their pricing strategies.
Also welcome is the upwardly-revised OBR growth forecasts for the four years from 2026 to 2030. If they turn out to be accurate, they will provide the Chancellor with much greater fiscal headroom, which in turn will mean lower pressure to increase taxes, more money for public services, and – crucially – a greater ability to make capital investments for the future.
Of course, these are only forecasts, and there are so many variables which could knock that projected growth off track. All we can do is hope that they turn out to be accurate.