The eagerly awaited budget by the first Labour Government since 2010 provided much to consider and delve into (a kitchen sink budget as has been suggested!), alongside a promise from the Chancellor that she would not want to repeat the £40bn tax rise budget that landed.
Whilst commentators have noted that the budget falls heavily on employers, this has the potential to disrupt consumers and their disposable incomes – and where they choose to spend their hard-earned cash.
Looking ahead, the Office for Budget Responsibility has said the economic measures outlined in the Budget would ultimately “leave GDP largely unchanged in five years”, no doubt this will be something the Government will be aiming to avoid given their ambitions for growth.
For technology driven businesses such as Delineate, there were signs of positivity in this budget. Whilst the focus of digital technology was centred at the public sector, and how increased investment would look to drive better outcomes for public services, the Chancellor gave positive signals regarding the value of the tech industry.
The digital and technology sector is one of the Government’s growth industries and supporting its ambition in this area the budget saw £500m in 2024/26 to rollout digital infrastructure, aiming for full gigabit broadband coverage by 2030. Whilst R&D budgets were protected rather than increased, the Chancellor has committed to 10-year budgets for key activities across R&D to ensure stability and collaboration.
The Chancellor also announced a review on the barriers to the adoption of transformative technologies that could increase innovation and productivity for growth industries such as digital and technology. Whilst not included in the budget statement, over the summer the Government set out its ambitions for AI opportunities with the development of an Artificial Intelligence Opportunities Plan.
As we look ahead to the impact on brands, when it comes to low margin industries it feels inevitable that some of the cost pressures passed on by way of higher prices for goods and services, and the potential for disruption to supply chains and lowered investment over the next 12 months. These costs will be predominantly felt through the increases to the National Minimum Wage and National Insurance contributions. The challenges for these businesses will be to manage the cumulative cost pressures whilst keeping costs down for their customers.
Ultimately for consumers, and for consumer confidence, the budget will be felt in the money they take home at the end of the day whether that be in pay, investments or savings. With Capital Gains Tax rising this could impact middle to higher income earners, who would typically own more by way of assets. Over the coming months households will start to see how changes to disposable incomes are affecting them, and how this then reflects in their purchasing decisions. Value ranges, multibuys, promotional and seasonal offers could continue to be the word on the street for cost conscious households as they weigh up their finances.
For brands, it’s critical to understanding the wider political environment, economy, and consumer confidence. For decades both budgets and policy announcements have had the power to flip consumer spending on its head, and to pivot category buying decisions made by households. Brands need agility, and the ability to track consumers attitudes and behaviours in real-time. Whether it’s understanding evolving category dynamics, the switch to private-label or testing and tracking campaigns, Delineate technology helps brands keep make decisions, fast.
