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More Budget upheaval is surely on the cards

The second Budget of 2010 surprised many: it had some good things in it for business.

The second Budget of 2010 surprised many: it had some good things in it for business.

The news on rate relief was good. The plans for forcing state-owned banks to lend vast sums to small businesses, on the other hand, sound good but a bit odd. Apparently, the way to force the banks to lend is to withhold bonuses from the bankers if they don’t do what they are told.

The plan to press ahead with the pending National Insurance hike, however, is the opposite of good.

I say ‘second Budget of 2010’ because this may be only part of the story. As is often the case, we now get the real news in the pre-Budget statement late in the previous year. By the time the delayed-reaction changes come into force, everyone has forgotten about them.

Even if there is time to get this finance bill through Parliament before an election, we should expect that if the Tories win, Shadow Chancellor George Osborne will probably announce yet another Budget as soon as they get into power. Or maybe it will be Vince Cable’s first outing as coalition Chancellor.

Whoever wins - if anybody - the real Budget, the one that will have a profound effect on the economy, will probably come in the public sector spending round. All parties have signalled that the cuts will be deep, and that will affect employment, spending and, inescapably, retail.

One more item from Budget day may have profound effects for retail. The 2.2% rise in the national minimum wage is key, as this tends to up the pay of employees on higher grades. The past year has been marked by pay restraint, flexible working and deferred redundancies. This comes at a time when recovery is not assured, and we should not expect its effects to be as delayed as some of the Chancellor’s other announcements.

Alan Hawkins is chief executive of independent retail body BHF-BSSA

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