Companies are hoping Chancellor Rachel Reeves will announce some concessions to ease business costs this week when she faces her biggest test since last October’s ill-received Budget.

The main focus of her Spending Statement will be cuts to some government departments that will see a 15% reduction in civil service costs over four years.

There is speculation that this would amount to more than 50,000 job cuts, taking it back to pre-pandemic levels. This could herald a new showdown with the trade unions.

Businesses are about to face the full impact of the Budget hikes in national insurance contributions and the minimum wage.

Research from independent funder Bibby Financial Services has revealed that uncertainty around the Spring Statement is causing short-term hesitation. Almost half (48%) of SMEs are delaying major investment decisions until after the Chancellor’s speech, and 63% say a lower interest rate environment would make them more confident to invest.

Research by Helm, formerly The Supper Club, reveals that more than a third (36%) of British businesses have frozen their hiring plans or are cutting staff because of the employers’ National Insurance (NI) increase.

More than half (58%) said urgent action is needed from the government.

Business leaders warn that the increased costs will have a particularly severe impact on sectors operating with slim margins, such as care services, where further efficiencies are difficult to achieve.

The increase in the National Minimum Wage, which will come into effect alongside the NI rise, is further compounding the financial strain on employers.

Andreas Adamides, CEO of Helm, said: “The timing couldn’t be worse, with many companies still working to stabilise after recent economic challenges.”

One member of Helm said: “We are offshoring roles as we cannot compete with the increased cost base.”

Wood Group

Company news is headed by a 5pm Monday deadline for Dubai-based Sidara to make clear its intention to bid for Aberdeen-based Wood Group or walk away.

With no update since the deadline was set on 24 February it is likely they will seek an extension from the Takeover Panel (see update here).

AG Barr

AG Barr will unveil full year results on Tuesday and Euan Sutherland, who succeeded long-serving Roger White as chief executive last summer, said the board was confident of growth in all its brands and further progress on margins.

Revenue  for the year ending 25 January is expected to come in at £420m (2023/24: £400m), representing c.5% year-on-year growth.

The company is forecasting a strong improvement in adjusted operating margin of about 13.5% (2023/24: 12.3%), helping to drive double digit profit growth.

After the recent trading update, AJ Bell investment director Russ Mould said: “Sales are up, profit margins are expanding faster than analysts had expected and cash flow remains strong, even as AG Barr continues to invest in capacity and its supply chains.

“The company now looks poised to make record profits in the year to January 2025 and follow up with a further advance in 2026, which may help to explain why the shares are trading close to five-year highs.

“The key to the investment case for AG Barr remains its efforts to rebuild profit margins after a torrid series of challenges and cost pressures over the past five years.”

Next

Next has raised sales and profits guidance nine times in the past two years, to help fire the share price to last September’s new all-time high.

It has a habit of defying downbeat trading at rival chains though AJ Bell notes that Lord Simon Wolfson was relatively guarded in the outlook statement that accompanied January’s trading update.

His guidance for pre-tax profit is £1.01 billion in fiscal 2025, ahead of a minor increase to £1.05bn in fiscal 2026, thanks in part to £67 million in extra wage and national insurance costs.

DIARY

Monday 24 March

• Full-year results from Caledonia Mining
• Deadline for Sidara to decide on offer for Wood Group
• In China, quarterly results from BYD

Tuesday 25 March

• Full-year results from AG Barr, Henry Boot, Tullow Oil
• First-half results from Bellway, Smiths Group

Wednesday 26 March

• Full year results from Ithaca Energy
• UK inflation
• UK Spring Statement

Thursday 27 March

• Full-year results from Capricorn Energy, Enquest and Next
• UK unemployment

Friday 28 March

• GfK UK consumer confidence survey
• UK government borrowing