Businesses, trade bodies and political parties in Wales have been reacting to the tax rises and spending cuts worth billions of pounds aimed outlined in the Chancellor's Autumn Statement.
Jeremy Hunt took to the dispatch box in the House of Commons to unveil the contents of his budget which included substantial tax increases that he said would put the UK on a "path to stability".
Mr Hunt told MPs he was having to make difficult decisions to ensure a “shallower downturn”, but the economy was still expected to shrink 1.4% in 2023.
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The Office for Budget Responsibility (OBR) forecast the UK’s inflation rate to be 9.1% this year and 7.4% next year, contributing to the squeeze on living standards.
Mr Hunt said the OBR concluded the UK “like other countries” is now in recession and was facing an increase in unemployment.
While growth in gross domestic product (GDP) was expected to be 4.2% in 2022, in 2023 the economy was forecast to shrink by 1.4% before growth of 1.3%, 2.6%, and 2.7% in the following three years.
The OBR’s bleak analysis showed rising prices would erode real wages and reduce living standards by 7% in total over the two financial years to 2023-24, wiping out the previous eight years’ growth, despite over £100 billion of additional Government support.
For a full breakdown of what Mr Hunt said, click here.
'Some of the measures today threaten to constrict small businesses'
Ben Francis, policy chair for the Federation of Small Businesses Wales, said: "Today, we heard the Chancellor say he will help Britain face into the storm. Our members have had their faces into the storm for some time. Small businesses are facing soaring costs, rampant inflation, falling revenues, difficulty accessing affordable finance and rise in invoices being paid late.
"We have called for measures to not just balance the books, but boost prosperity, growth and jobs. Instead, some of the measures today threaten to constrict small businesses.
"We welcome the stay on the reversal of the hike in National Insurance, which recently came into effect, freezing the threshold at a time of such high inflation is a stealthy hike in the jobs tax.
"While we were pleased to see the retention of the Employment Allowance at its current level, which was hard fought for by FSB, and the continuation of the lower National Insurance rate for the self-employed and employees, we remain disappointed in the Chancellor’s decision to slash the dividend taxation allowance, which poses another threat to hard-working owners of small businesses.
"The Chancellor’s announcement of a transitional relief on businesses rates is welcome news for businesses in England, although the decision to introduce such a scheme in Wales will be taken by the Welsh Government.
"Welsh Government needs to look at consequential funding from this scheme to buy breathing space for hard pressed Welsh businesses, to protect employment. We will now want to work with Welsh Government to consider how we can reduce the business rate burden in Wales, through measures such as the reinstatement of the 100% rates relief holiday. Measures such as this can play their part in protecting some of our most vulnerable but important community businesses.
"It is welcome that the Chancellor recognises the immense pressure sky rocketing energy prices have placed on small firms, and the continuation of the energy support package until April. However, it is imperative that continued support should be viewed through the lens of the size of the business, rather than specific sectors.
"Businesses want to know, with urgency, the support that will be available after April- as they have no certainty with which to plan their future costs.
"Our latest Small Business Index results suggest almost 35,000 small businesses in Wales are expecting to downsize, close or sell their business in the coming months. The urgency to support the small business economy cannot be overstated.“
"Statement provided few bright spots about the path back to economic growth"
Head of ACCA Cymru/Wales Lloyd Powell said: "While greater certainty is welcome and we look forward to early sight of the details, today’s statement provided few bright spots about the path back to economic growth. As businesses hunker down, it will become more important than ever for government to pump-prime investment and business growth.
“Businesses in Wales will now wait to hear how the Welsh Government’s tax and spending plans will be shaped by today’s announcement, in the hope that this doesn’t translate into less competitive rates of tax, whether on income or property.”
On tax Mr Powell said: "While a routemap for tax changes ahead is useful, wage inflation has raised the spectre of fiscal drag. Scrutiny and transparency about the implications of these tax changes will be key, especially where taxpayers find themselves subject to additional administrative requirements. Many more businesses (and individuals) will find themselves caught in the VAT and CGT regimes, at a time when HMRC is already under severe pressure.
"We remain disappointed about the lack of progress in simplifying our tax landscape - as greater simplicity, certainty and stability in our tax system would undoubtedly create a better business growth environment."
On public spending: “Going into the Autumn statement, OBR analysis showed that UK departmental spending is now only 90% of its real value compared to 2010, and capital spending – which is vital to boosting overall productivity – has fallen to a staggering 78% of 2010 investment in real terms. The Covid backlog in public services, from hospital waiting times to courts to HMRC service levels, is likely to deteriorate further with real terms cuts to spending.”
On energy costs: “Our members suggested that the current energy support package for firms does not go far enough, with a more targeted approach required, especially for sectors where energy costs are disproportionately high. As they look ahead to the next financial year, many small businesses will have been disappointed not to hear more detail about support likely to be available from April.”
"Retaining the triple lock will ensure state pension does not lose value"
Raj Mody, global head of pensions at PwC said: "The Chancellor's decision to retain the triple lock will ensure the state pension does not lose value in real terms. Based on September’s inflation rate of 10.1%, it will take the basic rate from £142 to £156 and the new state pension up from £185 to £204 a week. For the 12.5 million pensioners who fully rely on the state pension this will be welcome news.
“Looking forward, if the triple lock continues, then it’s likely that the state pension will catch up with the tax-free Personal Allowance by the end of the 5-year period that the Personal Allowance has been frozen for. That will create an interesting policy situation for future Governments, which may be better tackled earlier than later. To end up in the situation where the state pension itself is taxed seems odd, for the Government to give out with one hand and then take back with another.”
"Welsh ministers must also freeze business rates here in Wales"
Head of the Welsh Retail Consortium Sara Jones, said: "At the very least Welsh Ministers must follow suit and match the Chancellor in freezing the business rate here in Wales in the coming year, or many businesses will be questioning their ability to manage the mounting cost pressures they face. If the Welsh Government fails to match freezing business rates retailers face an additional £45m inflationary increase in their bills next April, which will inevitably mean fewer shops and fewer jobs."
"A very welcome boost for UK investment"
Amanda Blanc, group chief executive of Aviva plc, on today’s announcement on Solvency 2 reforms said: "This is a very welcome boost for UK investment. We estimate reforms to Solvency 2 will allow Aviva to invest at least £25 billion over the next ten years across the UK, including in critical areas such as social housing, schools, hospitals and green energy projects.”
"Tax changes added worry to a difficult time for SMEs"
Heidi Phillips from Neath, who runs cleaning company The Organised Home and Mind said: "As the owner of a SME based in South Wales, today's announcement regarding taxation measures could have a huge detrimental effect on my business. I'm already experiencing the knock on effect of the increase in fuel and food costs, with some customers reducing how often they book my services in a bid to save money. These tax changes are now an added worry to what is already a difficult time for many small business owners."
"Autumn Statement leaves people paying more for less"
Rebecca Evans, the Welsh Government's Finance Minister, said: "We should be under no illusions; this statement confirms we are in a deep recession. Real incomes are set to fall by 7% over the next 2 years, while inflation is at its highest rate in 41 years.
"Today’s Autumn Statement is an invoice for the UK government’s failure to manage the economy over the last 12 years. It provides pain today and pain tomorrow, with higher taxes and energy costs now and spending cuts to come. Ultimately, it leaves people paying more for less.
"Throughout this process I have made clear to the Chancellor that Wales cannot afford deep and damaging austerity. I am relieved that the Chancellor has at least partially responded to my calls for more funding for public services in the here and now.
"However, let me be clear that today’s statement doesn’t even come close to providing the funding needed to protect public service budgets against the immense challenges caused by record inflation.
"We will be carefully analysing the detail of today’s announcements ahead of our December budget."
"It is light on green innovation and has nothing on boosting export led-growth."
Paul Slevin, executive Chair of Chambers Wales South East, South West and Mid, said: “The Chancellor has stayed true to his word in focusing on financial stability and targeting support for the most vulnerable in society. But in the teeth of a recession, this statement will not increase business confidence.
“Businesses will look at the announcements and welcome support with business rates, and retention of the employment allowance, though the reduction in the dividend allowance will impact many smaller firms.
“Almost half of businesses tell us they will find it difficult to pay their energy bills once the government’s Energy Bill Relief Scheme ends on 31 March 2023. The sooner we get clarity on where future support will be targeted the better.
“It is good to hear plans to improve energy efficiency across the economy, but we need to see greater urgency as firms battle with their bills in the here and now.
“It is also good news that Sizewell C will proceed, and we are relieved that HS2 and Northern Powerhouse Rail have not been cut further. These projects will provide a major boost to regional economies as well as improving our national infrastructure.
“The UK Government must do more to improve conditions for businesses to invest and grow, otherwise we will be starting from a weak base to power our recovery once global economic conditions stabilise.
“The Chancellor’s Statement is light on green innovation, doesn’t address current labour shortages and has nothing on boosting export led-growth.”
"Balancing books best long-term solution to inflation"
Secretary of State for Wales David TC Davies said: "The difficult and necessary decisions taken today aim to tackle inflation and restore confidence and stability in the UK economy.
“The UK Government has already committed to protecting Welsh households and businesses from rising energy prices, but balancing the books and getting debt falling is the best long-term solution to inflation and to limit interest rate rises.
“As the Chancellor made clear, there is a tough road ahead but the economy remains strong with UK unemployment at historically low levels. Difficult choices are being made, but it is only through sound management of the public finances that we can provide the long-term economic stability that is so vital for families and businesses up and down Wales."
"Every tax rise and budget cut down to Conservative incompetence"
Welsh Liberal Democrat leader Jane Dodds MS said: “Every single tax rise and spending cut in this budget has come about because of the incompetence of the Conservative party. While Boris Johnson and Liz Truss have trashed our economy, hardworking Welsh people are now being left to pick up the pieces of their destruction, including having their income squeezed like never before and living standards falling.
“Meanwhile Welsh Conservatives in the Senedd have supported this destruction feverishly from the sidelines. A recession that is set to wipe out 8 years of rising living standards with standards falling 7 per cent over two years, that is the price of a Conservative Government.
“This Conservative chaos will hammer ordinary people and the services they rely on. They should hang their heads in shame. People in Wales demand better. Welsh Liberal Democrats are ready to play our part in sweeping the Conservatives away and offering a positive vision for a fair deal for the people of Wales.”
"£1.2bn for Welsh budget clearly inadequate"
Plaid Cymru Treasury spokesperson Ben Lake MP said: "The Chancellor was at pains to claim that this statement was not an austerity budget. Let’s be clear – pressures on Welsh public services will continue to worsen after today’s statement due to inflation.
“A decade of austerity followed by the pandemic has stretched our public services to breaking point. The Welsh Government estimated that their ability to fund vital services will be diminished by £4bn. An additional £1.2bn is clearly inadequate for the task.
“The Welsh economy urgently needs proper investment in our underlying infrastructure – from energy, to transport, to digital connectivity. I reiterate Plaid Cymru’s call for the UK Government to establish a commission to reform the tax system in a progressive way. That is the only way to provide sustainable funding for our public services.
“A glaring omission from the Chancellor’s statement was the impact that Brexit has had on the economy. Credibility requires honesty about the economic reality facing us. I urge the Chancellor to recognise that our economic prospects are worsened by being outside the world’s largest trade bloc, and to take practical steps to urgently reduce trade friction.
“In allowing energy prices to surpass £3000 in April, the Chancellor will push thousands of Welsh households into fuel poverty. For those living off the gas-grid the increase in the Alternative Fuel Payment to £200 will be little consolation given that the cost of heating oil has more than doubled over the past year and we are still none the wiser about when the money will be delivered.
“It is also concerning that businesses that are not connected to the mains gas grid are also being made to wait to learn when they will receive support with their heating costs this winter. Many are already having to make difficult decisions, and so I fear that the Government is leaving it too late to help thousands of off grid businesses across Wales.”