What are your thoughts after the announcement of the budget for 2023?
The Office for Budget Responsibility predicts the UK to avoid recession in 2023, although the economy will shrink by 0.2%. For many this could be a concerning statement, with unemployment rate set to rise to 4.4% from the current rate of 3.7%. For young people finding a job after education may become a real struggle; in 2023 nearly 15,000 job roles have been cut or made redundant. This also means that promotions and pay rises will be harder to achieve.
Along with this, another 170,000 job roles are set to be lost; households will be relying on less income, meaning less disposable income, causing more businesses to lower sales. Industries such as retail, manufacturing, and leisure and hospitality will suffer the most, as jobs within the industries are at the highest rate of risk. Consumer goods in production not being prioritised or necessary to maintain basic standards of living. On the opposite end of the scale, product demand for supermarkets home brand products will lead to an increase, resulting in warehouse and other industrial roles following. The higher demand for the product will result in a higher demand for staff.
With the economy set to shrink, house prices and car prices are set to also fall by 5%. Although this may be a benefit at first, the interest rates are likely to skyrocket, making long term payments unaffordable.
Michael Dring, our Finance Director here at Venatu, stated, “The budget was described as a budget for jobs, and I think a lot has been done to support this. The changes to the childcare scheme will be welcomed, however they don’t take effect for another 18 months, and then enhanced a year later, so no immediate effect.
It is disappointing that no further support has been made available to businesses effected by energy cost increases, the existing scheme ends this month, and this will have a serious impact on costs until the prices start to fall, however the extension of the domestic support scheme will be a huge relief to many households.
The inflation forecasts are encouraging, this should bring some relief to employers who are suffering from increasing wage bills, coupled with the large increases to the minimum wage next month. The big question is, will interest rates fall on the back of this, I suspect not, with global instability in Ukraine and the Middle East, I think they will stay at the current level for some time to come.
Overall, I think the Chancellor could have done much more, much sooner to stimulate growth, but I am sure the long-term result will be positive”.