Chancellor promises 'tax roadmap' for business as retailers get a boost from August spending uptick

“It’s tough for UK businesses to get fired up when there’s still so much gloom around.” comments Danni Hewson, Head of Financial Analysis at AJ Bell

“Today Chancellor Rachel Reeves took a couple of important but tentative steps forward, promising to make good on Labour’s manifesto pledge to deliver a ‘tax roadmap’ for businesses and reiterating that corporation tax will indeed be capped at 25%.

“Amidst all the speculation and uncertainty about what measures might be pulled out of the red Budget box to help fill in that £22 billion black hole, there had been a sneaking concern that corporation tax might be up for discussion.

“There was also the commitment that full expensing will remain, an important step which helps give a degree of confidence when it comes to making investment decisions which will be needed if the economy is to grow in the way the government needs it to.

“The latest data from the ONS shows dealmaking activity among UK firms slumped in June as the country waited for the election campaign to reach its conclusion.

“But the initial honeymoon seems to have hit a rough patch after rose scented warnings that the worst is still to come, which has pushed Keir Starmer’s already tarnished favourability ratings to a post-election low, according to a new YouGov poll.

“London markets have looked subdued, but then over on Wall Street the Labor Day holiday doesn’t seem to have left US investors in a better mood either.

“There’s still time between now and the 18th for economic data to muddy the waters and August’s meltdown demonstrated that belief in a soft-landing can easily be undermined.

Retail

“After a tough few months for retailers there do seem to be some tentative reasons to be cheerful, especially when it comes to our weekly shop.

“Tesco, B&M and Marks and Spencer were amongst the day’s gainers on the FTSE 100, as were consumer goods giants Reckitt and Unilever, after the latest BRC retail figures showed a slight uptick in spend in August.

“And Watches of Switzerland’s latest update suggested that the worst may be over when it comes to the squeeze on the luxury goods sector.

“But though people are feeling a little more upbeat about their finances the big test will come once the fairy lights are taken out of storage.

“At the moment consumers are splurging on little treats, like chocolate and biscuits.

“But will they feel the need to stay frugal when it comes to Christmas, or will Santa be feeling a lot more generous by the time the holiday season gets into full swing?”

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