David McCorquodale, head of retail at KPMG, comments on what the 2013 Budget means for retailers:
“Retailers wanted measures that put more money in consumers’ pockets, and reduced the costs on their balance sheets. Today’s Budget has touched on the first, but completely failed to achieve the second.
“The decision to go ahead regardless and increase business rates will squeeze embattled retailers further and will not deliver the respite the retail sector needs to recover.
“Retailers are now left facing a 2.6% hike to their business rates bill, a move which will add £175m to their overheads. Amongst a backdrop of flatlining sales and continued austerity, this is not a welcome move by the Government.
“With its extensive property portfolios the sector is particularly vulnerable to rate rises, and today’s decision to do just that will undoubtedly have a negative effect on those businesses in distress.
“A complete rethink of how business rates are calculated is needed, and in the meantime a freeze should be the only way forward.
“On a positive note, the freeze on fuel duty will deliver some light relief for retailers. A rise in duty would have added significant costs to their fleet when both delivering goods to stores, and fulfilling online orders and getting the goods to the consumer’s destination of choice. Smaller retail businesses will particularly benefit from the introduction of the Employment Allowance of £2,000 a year towards employer National Insurance contributions.
“Measures to put more pounds in consumers’ pockets were also present. Faster progress towards the coalition’s target of a personal tax allowance of £10,000 was a welcome announcement, but its implementation in 2014 is unlikely to significantly boost consumer confidence and kickstart spending in the near future. Tackling job creation and boosting employment levels will be the ultimate driver to turnaround consumer spending.”
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.