What the new UK budget means for luxury brands

On March 11th the UK’s new Chancellor of the Exchequer, Rishi Sunak, set out the Conservative government 2020 budget. Unofficially called the ‘coronavirus budget’ because of the last-minute fiscal changes implemented to address the impact of COVID-19 on the economy, here is what British luxury trade organization Walpole had to say about what it means for the country’s luxury brands.

“Walpole welcomes the measures set out in the Spring budget specifically the temporary actions on business rates, emergency funds and loans which will be helpful to a number of the SMEs which make up 60 percent of the British luxury sector and whose cash-flow vulnerability put them at risk in situations such as the current Coronavirus outbreak. However, many London-based retailers will not see any benefit from the business rate freeze as they pay well in excess of 51,000 pounds per annum in rent. The fundamental review of business rates promised for later in the year is good news for all, particularly if larger retailers are also set to benefit from a fairer system.

As British luxury is highly export focused with 80 percent of what it produces destined for overseas markets the increased support announced for UK exporters, by way of a 2bn pound increase in the UK Export Finance Direct Lending Facility, is positive for the sector.

There was a lack of mention of skills and the Apprenticeship Levy, which we would like to see reformed to improve access for employers and apprentices alike. An overall simplification of what is widely regarded to be a complex and inflexible system currently to ensure that British luxury businesses are able to plug the skills gap particularly in hands-on making roles is desperately needed.”

With just over 40 percent of businesses trading 5 years after they were founded in 2013, it is ‘normal’ for some businesses to fail. As the Financial Times wrote: “Business survival is all about cash flow. They can keep going as long as they can pay their bills.”

Image Burberry campaign via Walpole