There can be few Chancellors in modern British political history with less room to manoeuvre on budget day than George Osborne today and retailers should expect few surprises – either good or bad.

There can be few Chancellors in modern British political history with less room to manoeuvre on budget day than George Osborne today and retailers should expect few surprises – either good or bad. 

Despite relatively strong financials from the likes of Debenhams and Sainsburys in the last 48 hours, and better news on inflation, consumer confidence remains stubbornly low. Worse still, whilst economists pore over the latest figures on GDP, CPI or QE, unemployment continues to be the very real face of this crisis and is expected to reach 9% this year.

There are talks this morning of tax cuts for the rich and an increase in the amount you can earn before paying any tax at all, to more than £9,000. But from under a mountain of debt, the Chancellor has few financial levers left to pull.

If the big financial mechanics are stuck fast, then the Coalition must turn more attention to the environment that British retail operates in to stimulate growth. On top of a drive to meet its commitments to cutting red tape and a simplification of the planning system, two key measures must be addressed: next month’s 5.6% rise in business rates and August’s 3p per litre rise in fuel duty. 

The use of September’s RPI to calculate the annual increase in business rates has resulted in an inaccurate and potentially damaging scenario. By the time the increase comes into effect, inflation is likely to be closer to 3%, yet it will land retailers with an extra tax bill close to £350m. Meanwhile, the rise in fuel duty threatens to curtail any fragile signs of a recovery. 

The economic outlook has brightened a little since the beginning of the year – for once the Office for Budget Responsibility won’t need to revise down its growth forecasts – so Osborne may have some political leeway. But if neither of these tax hikes are addressed, retailers will find themselves squeezed further between rising costs and falling consumer confidence.

The Government has promised much about opening Britain up for business, but delivered little so far. Today would be a great place to start.