Relief for North Devon businesses as inflation dips again

There was some relief for North Devon's small businesses last week with news that inflation has dipped again.

Responding to news that consumer price inflation rose by 3.2 per cent in the year to March 2024, down from 3.4 per cent in February, Tina McKenzie, policy chair at the Federation of Small Businesses (FSB) said: “March’s fall in the annual consumer price inflation rate takes some more of the heat out of rising prices for small businesses.

“It’s difficult to overstate the toll that the cost of doing business crisis exacted on small firms, so further signs that its worst effects are firmly behind us are very welcome.

“Small business owners know all too well that they can never be complacent, especially in an economic situation characterised by sluggish growth and rising unemployment.

However, there are some early indications that small business confidence levels are recovering, which – if it translates into investment and expansion plans being put into action by small firms – is good news for our economic growth prospects.

“Small firms will now turn their eyes and their hopes to the Bank of England, and will hope that the base rate cut many have been eagerly awaiting arrives sooner rather than later.

We don’t want to risk stifling the small upward movement in GDP recorded in the first two months of this year.”
Ms McKenzie added: “We’re calling again for the Government and for politicians of all stripes to think very hard about how they can best support small business growth, to provide the best possible platform for entrepreneurs to start up new ventures, and for existing businesses to expand and thrive.

“Small business owners will be watching carefully to see what is being proposed to help them in this election year.
“Policies which are targeted at helping small businesses to grow, take on staff, and innovate are needed, so that green shoots can take root and flourish.”

Small businesses received a boost on April 1 when the VAT registration threshold was raised from £85,000 to £90,000, and £4.3 billion of business rates relief came into force.

Recognising the inflationary pressures facing small businesses, especially with energy bills,  Chancellor Jeremy Hunt announced a raft of measures to support them in his Spring Budget, sticking to his plan to grow the economy and reward hard work.

He said that raising the threshold would take 28,000 businesses out of paying VAT altogether, and ensure the UK has a higher threshold than any EU Member State and joint highest in the Organisation for Economic Co-operation and Development (OECD).

The small business multiplier for business rates was also  frozen from April 1 for a fourth consecutive year, protecting over a million ratepayers from a 6.6 per cent increase in their bills.

The measure is part of the £4.3 billion business rates support package announced in the Autumn Statement that includes the 12-month extension of the 75 per cent relief for 230,000 retail, hospitality and leisure properties, which also came into force at the start of this month.

Exchequer Secretary Gareth Davies visited the Chai Guys business in London alongside Enterprise Nation, a small business support network, to discuss  changes to VAT and business rates.

The FSB is the UK’s grassroots business group, founded in 1974 as a non-profit, non-party-political organisation that offers its members  business support.