UK chancellor Rishi Sunak has delivered his one-year spending review which includes an increase to the National Living Wage and further rates relief for businesses.
The National Living Wage for individuals aged 23 and over will increase by 2.2 percent from 8.72 pounds to 8.91 pounds, effective from April 2021, Sunak told the House of Commons on Wednesday.
A new 3-year long 2.9 billion pound ‘Restart programme’ will be introduced to provide support to over 1 million unemployed people and help them find work, while a 2 billion pound ‘Kickstart Scheme’ aims to create hundreds of thousands of new, fully subsidised jobs for young people across the country.
The UK’s Office for Budget Responsibility (OBR) forecast the economy will contract this year by 11.3 percent, the largest fall in output for more than 300 years, Sunak said.
Economic output is not expected to return to pre-crisis levels until the fourth quarter of 2022.
Sunak said the UK is forecast to borrow a total of 394 billion pounds this year, equivalent to 19 percent of GDP.
Responding to the spending review in a statement, British Retail Consortium CEO Helen Dickinson said she was “encouraged” that the government is considering options for further rates relief for businesses impacted by Covid, but that more needs to be done.
“Many retail businesses have been shuttered for the past month, depriving them of 8 billion pounds in sales. A return to full business rates liability in April would be impossible for some firms to meet and freezing the multiplier in 2021/22 does not solve this problem,” Dickinson said.
“The Government should adopt our proposal for business rates relief at 50 percent which reflects the fall in retail property values and brings market reality into the system, while generating much-needed revenue for the Treasury. This, along with an extension to the moratorium on debt enforcement, to encourage constructive dialogue between landlords and tenants on rents, will support the resilience of the retail industry. This would allow the industry to invest in the future and play its part in the economic recovery of the UK.
Dickinson also said she was “disappointed” the government hadn’t reversed its decision to end tax-free shopping for international visitors to the UK, a move many believe will negatively impact UK retail by diverting tourists to spend elsewhere.
“The policy will deliver a relatively small saving for the Treasury at the expense of a far greater return to the UK economy, and will damage the UK’s position as a top destination for international shoppers,” she said.
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