Budget 2012: Retailers gain on Sunday trading but lose on fuel

21 March 2012

When it comes to retail, the Chancellor giveth and the Chancellor taketh away.

Retailers have been given a boost in this year's Budget with the relaxation of Sunday trading restrictions during the Olympics, but will be miffed that the long-campaigned-for cut in fuel duty did not materialise and perplexed by some tinkering with VAT.

Retailers will be given a leg up, albeit a temporary one, during the Olympic period when restrictions on Sunday trading will be relaxed to allow large shops to remain open longer than the currently-allowed six hours. The change will apply for eight weekends from 22 July.

Osborne said it would be "a great shame" if people from around the world came to Britain for the Olympics only to find a "closed for business sign" on the door.

John Cridland, director general of the Confederation of British Industry, told Sky's 'Murnaghan' programme: "I think there is a big difference between a temporary measure to try and lock in some of the spending of the thousands and thousands of international visitors who will come to Britain during the Olympics on a Sunday and a permanent change.

"If it is a permanent change we would need to consult a lot of people, the shops themselves and the workers in those shops, but a temporary change just for the Olympics - every little helps."

A spokesperson for Marks and Spencer said: "We recognise that the Olympics is a once-in-a-lifetime event and we would be keen to take advantage of this change." The company chose not to comment further, saying M&S does not comment on political decisions.

British Retail Consortium director general Stephen Robertson raised concerns that business rates were not addressed by the Chancellor:

"It's very disappointing that the Chancellor has done nothing to scale back the impending 5.6% increase which will add £350 million to retailers' costs."

Foolish fuel tax

In Wednesday's Budget, Osborne also said that he would go ahead with the 3.02p per litre increase in fuel duty due to take effect on 1 August. However, he promised not to raise the tax above inflation as long as oil prices remain above £45 a barrel, an unlikely event with the current price around £79.

Since transport costs make up a considerable proportion of retailers' costs, profits could be hit or companies forced to raise prices if fuel costs continue to rise as they have been in recent years, driven by oil prices.

Chief executive of the Road Haulage Association (RHA) Geoff Dunning said: "The RHA's weekly fuel price survey last week hit an all-time record high - and yet the Chancellor will be driving costs up by another £1,200 a year for a large truck - costs that hauliers must now set about trying to recover from their hard-pressed customers."

The freezing of vehicle excise duty for hauliers - effectively a cut when inflation is taken into consideration - will go some way to easing concerns, possibly relaxing pressure on transport prices.

This article was written for our sister website Interactive Investor


Add new comment