The UK Chancellor, Jeremy Hunt has announced his spring statement for 2024. It arrives with anticipatory whispers and conjectures about its implications for the UK economy. As the country teeters on the cusp of another general election, this budget, potentially the last before the nation heads to the polls, carries with it Mr. Hunt’s desire to leave a positive impression on the electorate. With the Office for Budget Responsibility (OBR) providing a cautiously optimistic revised outlook, the statement holds particular significance for our customers at Okappy.

This article aims to distill the essence of the Chancellor’s fiscal plans and examine the potential ripple effects on your business operations. By scrutinising the key measures which were announced, we will navigate the intricacies of the budget to uncover opportunities for our customers to harness these developments to their advantage.

The Economic Landscape

The economic landscape, according to the OBR, is navigating through a period of adjustment. Although the COVID pandemic is already a distant memory for many, there are still a number of geopolitical tensions. For the facilities management and construction sectors, the key takeaway is the government’s commitment to public spending and infrastructure development. This commitment not only promises a direct influx of projects but also underpins the potential for ancillary services demand, from maintenance to utilities management.

In construction, the emphasis on infrastructure and housing addresses both immediate demand and longer-term sustainability goals. Companies in this sector might find opportunities in government-led projects, aligning with initiatives for greener and more sustainable building practices. Similarly, for utilities and trades, the focus on energy security and efficiency projects could spell new contracts and partnerships, particularly in renewable energy projects and retrofitting existing infrastructure to meet new standards.

Key Budget Changes and Their Implications

Tax Changes: The budget outlines tax adjustments aimed at fostering business growth and investments. For large entities in the aforementioned sectors, this could mean revisiting investment strategies, especially in technologies that promise long-term cost savings and efficiency improvements.

The biggest change was a 2p reduction in National Insurance. While this may not directly affect our customers, it’s anticipated to positively influence the broader economic environment. This shift is expected to lead to enhanced economic prospects, contributing to a gradual increase in economic activities.

Unfortunately there was no mention of any extension to full expensing for hiring, which could significantly benefit many firms in our sector. However, this matter is under review.

Inflation and Interest Rates: With the OBR projecting a stabilisation in inflation and interest rates, businesses can anticipate a more predictable cost environment. This stability is crucial for long-term planning and contract negotiations, particularly in sectors like construction where materials and labour costs significantly impact project viability.

Labour Market : The OBR’s comments on labour market participation and migration have direct implications for sectors that are labour-intensive. Companies might need to adapt their workforce strategies, considering potential changes in the availability of skilled labour and the costs associated with hiring and retention.

Economic Outlook

The OBR’s outlook suggests cautious optimism, with expectations of economic growth and inflation stabilisation. This outlook is corroborated by our own anecdotal evidence from customer interactions, attendance at events and jobs and invoice data from the platform.

Jobs done and invoices raised over 2023/4 (including estimate for March 2024)

Although the number of jobs done has fallen in the last few months, the value of those jobs has increased leading to increased revenue from our customers. While challenges remain, there are clear opportunities for growth and expansion. Businesses that adapt to the changing regulatory and economic environment, invest in efficiency and sustainability, and navigate the labour market dynamics adeptly, will be well-positioned to thrive.

Our Recommendations for Customers

Leverage Government Initiatives: Stay abreast of government tenders and projects, particularly those aligned with sustainability and infrastructure development.

Invest in Technology: Adopt technologies that enhance operational efficiency, from project management software to energy-efficient equipment.

Workforce Planning: Develop a flexible workforce strategy that considers the evolving labour market and invests in training and development to mitigate skills shortages.

Financial Planning: Utilise the tax and financial incentives provided in the budget to strengthen your balance sheet, making strategic investments for long-term growth.

Conclusion

The Spring Budget 2024 provides a roadmap for companies looking to navigate the post-pandemic recovery. For Okappy’s customers in facilities management, construction, utilities, and trades, the message is clear: opportunities abound for those prepared to invest in the future, adapt to economic and regulatory changes, and focus on sustainability and efficiency. With a strategic approach, businesses can not only navigate the current landscape but also set the foundations for sustained growth and profitability.