Tackling deficit with targeted cuts is right, says BRC

20 October 2010

Retailers support urgent action to reduce the budget deficit and welcome the Government’s commitment to provide early certainty over which jobs and services will go in detailed departmental business plans due to be published next month.

Reacting to the Comprehensive Spending Review, today (Wednesday), the British Retail Consortium (BRC) said it is crucial to end the uncertainty currently undermining consumer confidence.

The BRC’s own research shows uncertainty over where and how the cuts are to be applied has contributed significantly to sluggish growth in non-food retailing, with consumers putting off discretionary spending due to fears over job cuts.

The BRC also welcomes the Government’s commitment to invest in the infrastructure which will support private sector growth. The retailers’ organisation is now calling for consistency in Government policy to give retailers the predictability they need to make investment decisions and contribute to the private sector-led recovery.

Stephen Robertson, British Retail Consortium Director General, said: “These are serious plans to tackle the Budget deficit and will remove some of the uncertainty which was driving down consumer confidence. Beginning to deal with the deficit now is right. Delays would just store up more pain for later, risking increased borrowing costs, higher taxes and more job losses.

“But individual households and communities will continue to be cautious until the impact on their future prospects is clear. Retailers need the Government to communicate exactly how the cuts will be delivered as soon as possible so that they can make investment plans.

“It’s a tough judgement but the Government has achieved the right balance between public spending cuts and tax increases. The situation needs to be monitored carefully. There are testing times ahead. January’s VAT increase will have an impact on sales and we’re expecting a tough trading environment in the first quarter of 2011. The Government should avoid any further steps which might cause nervous consumers to take flight or deter businesses from taking on new staff.”

The BRC backs cuts but they must be applied in the right way. It is calling on the Government to measure the impact of each cut against four key tests it has devised to ensure the retail-led economic recovery is not undermined.

The four ‘tests’ all ask: Will this measure enable retail to flourish……….

• by preserving the essential infrastructure for trading e.g. transport networks, education and skills, energy and water supplies, universal broadband, town centre management and development, housing and timely health care for our workforce?
  
• by reassuring our customers and enabling them to participate fully in society e.g. clear plans on which services/jobs will be preserved and how reductions will be introduced where cuts are necessary, equitable treatment of poorer households already managing over-stretched budgets, ‘rehabilitation’ plans for those regions where the public sector currently employs a high proportion of the workforce?
  
• by stimulating and supporting innovation and increased productivity e.g. in R&D on new technologies and processes, stimulating emerging markets in green products and services, reducing bureaucracy and opening up new markets?
  
• by encouraging national and community cohesion so that we can all work together to rebuild the economy?
  

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