Dealers at risk after emergency Budget

Alan Ball warns that dealers will suffer following this week's emergency Budget

Ball: VAT rise will adversely affect resellers

There is no doubt that the UK needs to return to positive growth and to repay the significant deficit we have inherited. At face value, the emergency Budget gives hope to small businesses and dealers, but what will really happen?

On the plus side, corporation tax will fall to 20 per cent from next year for small businesses and the National Insurance threshold will be increased to £21 per week, a helping hand which many will welcome.

But in reality, for many small businesses and in particular dealers in our market, the increase in VAT will hit businesses and end users alike. It is this additional tax that will ultimately stifle the growth needed to realise the best opportunities.

We have already seen a commitment to reduce spend across business and in particular the public sector. This means spend restrictions across all departments – and the office supplies category is usually the first to be slashed.

Add to this the increase in VAT and manufacturers’ increases and you have a need to reduce spending – further constrained by an additional increase in product prices of 2.5 per cent.

That reduction means lower turnover and lower profits – so the upsides that are intended just won’t happen.

We all have to take some pain in this tough period. But the increase in VAT will mean many of our dealers and small businesses will receive more than their fair share of that pain.

Alan Ball is managing director of Spicers UK