Spring statement ‘will be all about cuts’ Belfast accountant predicts

Ahead of Wednesday’s spring statement, Prime Minister Sir Keir Starmer says the government will not “alter the basics” of public spending when quizzed on whether more budget cuts will be announced.

Chancellor Rachel Reeves is expected to announce spending cuts for some government departments.

The fiscal tightening comes amid a backdrop of cuts Labour has already announced to the welfare bill, and to Civil Service running costs, which have caused unrest among the party’s backbenchers and the unions.

Asked if cuts would be announced for departments whose spending is not protected, Sir Keir said his government was “looking across the board” at spending.

“At the budget last year we made some record investments, and we’re not going to undo that,” he added.

But Ross Boyd, owner and director of Belfast-based chartered accountancy RBCA, says he believe the spring statement will be “all about cuts”.

He said “The welfare reform seems to be the big one, followed by NHS England and a 15% administrative saving across government.

“Most business owners in Northern Ireland have already checked out on this government’s plans as they seem to largely affect England and are likely to be years away. Positive reform is great, but what about the private sector pressures we’re facing now?

“With the new tax year fast approaching, owner-managed businesses across Northern Ireland are already braced for more financial strain.

“The national insurance increase is one of many cost burdens that are reducing margins for employers and making it harder for local firms to deliver growth. Since the recent autumn budget, difficult economic conditions have only become clearer for business.

“We are in a relatively high tax and low growth economy with more volatile global uncertainty. In fact, we are in an era of ‘stagflation’ with local businesses facing the worst of both worlds: stagnating growth and rising costs.”

He added: “Businesses need to seek ways to remodel with AI and other techniques to support less labour hours – difficult in our service-based economy.

“Wednesday is likely to bring a Reeves-style rhetoric about encouraging long term growth and productivity. All of this is great, but it will not help in coming months.

“Is there simply no plan for short term growth? If the revenue plan had have been better, with more headroom after the spending review, no real changes would have been required this week at all.

“The plans lack adequate contingency, and the rules are too rigid. There needs to be flexibility and fiscal headroom – these are the things that business owners understand well.”

Mr Boyd added: “Owner-managed businesses are the backbone of our local economy, yet they feel disenfranchised, increasingly like an afterthought in economic policy.

“Businesses need a pragmatic approach to stimulate growth, however, if recent trends are anything to go by many in our client portfolio fear the Chancellor will double down, leaving them to deal with an increasingly complex taxation environment.

“Reeves talks about HMRC collecting more taxes, but at the minute HMRC struggles to answer the phone. Reality is needed, but that’s unlikely to arrive by Wednesday.”