The impact of the autumn budget has unsurprisingly been a focus for discussions on the economic outlook. The Office for Budget Responsibility commented that “against a broadly unchanged economic and fiscal backdrop since March, this budget delivers a large, sustained increase in spending, taxation, and borrowing”.
The emphasis on stability and sustainable growth is encouraging, and the focus on regions and growth sectors is important. The public investment promised may also help to build resilience and make the UK less susceptible to shocks in the future.
However, following the announcements, charities have been looking at the impact of the higher taxes and how these can be factored into financial forecasts. They have also voiced concerns around the strain that will be placed on the sector, although there are also charities which are looking at the future opportunities.
Still turbulent times
The start of the year saw the word “turbulence” spring to mind, which has remained relevant since then. In alignment with how the weather has turned over recent weeks, the range of uncertainties shows no sign of abating. The much talked-about “triple whammy” of a challenging fundraising environment, increased cost pressures and rising charitable need and demand looks set to continue. This is reflected in data from the Office for National Statistics (ONS), which shows that the estimated monthly gross domestic product (GDP) increased by 0.1% in the third quarter of 2024, although GDP fell by 0.1% in September 2024.
The Consumer Price Index rose by 2.3% in the 12 months to October 2024, up from 1.7% last month, and back above the Bank of England’s 2% target. The annual growth in regular pay from the ONS was 4.8% in the three months to September 2024. This was previously lower than this only in the three months to June 2022, although there continues to be growth in pay in real terms. The trend of declining vacancies remains, with the labour market continuing to cool in the third quarter of 2024.
As we head towards the end of the year, it can be tempting to adopt a “wait and see” approach and simply go with the flow. Even where this is the case, there should be proactive monitoring and no hesitation to take action, where appropriate. There are likely to be difficult strategic, financial or operational decisions for a number of charities to make, at least in the short term, over and above those which have already been made.
Daniel Chan is partner and charities leader at PwC
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