Business groups have in recent weeks been mounting high-profile and persuasive campaigns to let Chancellor Rachel Reeves know what should be included in her maiden Budget to boost the economy.

Ms Reeves will certainly be aware of the clamour for support, not just from the business world but from many other sections of society and government departments, as she bids to chart a way forward for the UK economy against a backdrop of straitened public finances.

But it seems inevitable that a lot of people are going to be feeling disappointed by the time the contents of the Chancellor's red box are revealed by mid-afternoon on Wednesday (October 30). The Labour Government has taken every opportunity going to hammer home the desperate state of the fiscal inheritance it received from the Conservatives on taking power in July, so much so that anyone looking to be uplifted by the Budget looks certain to be let down.

While the state of the public purse should not be dismissed, it remains difficult at this stage to see precisely how the UK Government is going to generate the economic growth it covets without some form of investment or stimulus. Economic conditions in the UK do seem to be slowly improving, with the rate of inflation easing and a second cut in interest rates this year now expected later in the autumn. However, growth remains anaemic, productivity sluggish, and many businesses continuing to struggle with costs that are massively higher than they were before the inflation crisis of recent years.

Read more:

You would certainly hope that Ms Reeves is aware of these concerns and the issues raised in the build-up to the Budget by representatives of sectors such as hospitality and retail, which have been making clear their concerns around business rates and the need to reform the antiquated system.

Firms in the hospitality, retail, and leisure sectors in England and Wales currently benefit from rates relief of 75%, up to £10,000 per business, under measures originally brought in to help companies recover from the pandemic. However, that relief – which has not been provided in Scotland since 2022/23, albeit rates relief is offered in different ways north of the Border – will disappear at the end of the current financial year on March 31, 2025. This has sparked warnings that the anticipated quadrupling of rates in April will lead to business closures and job losses.

This week, around 170 business leaders from hospitality companies such as JD Wetherspoon, Greene King, Fuller’s and Stone Group, and high-street chains like Burger King and Caffe Nero, wrote an open letter to the Chancellor, calling for the introduction of a “new lower, permanent and universal multiplier for the hospitality sector, to be adopted across all nations of the UK”.

“All hospitality businesses should benefit from that multiplier, removing the cap that has acted as a disincentive to growth as employers decide that opening a second premises is simply not worth the cost,” the letter states.

“Further closures will be so detrimental to the Government’s growth agenda and put a dent in our sector’s ability to create places where people want to live, work, and invest. If we don’t want to lose out on vital investment, job creation, and regeneration of our high streets, then the Chancellor needs to act to introduce a lower level of business rates for hospitality at the Budget.”

UKHospitality Scotland has said that it would expect the Scottish Government to “make similar moves” north of the Border, should its Westminster counterpart act on the industry's demands.

But hospitality is not the only sector calling for action on business rates. The chief executives of more than 70 major UK retailers wrote to Ms Reeves earlier this month asking her to slash the tax burden on the industry to “level the playing field between industries”, and for action to reform the business rates system. They called for the introduction of a retail rates corrector - a 20% downward adjustment in business rates paid on retail properties – which the British Retail Consortium says will redress the “imbalance” that sees the retail industry pay 7.4% of all business taxes (£33 billion), a share roughly one-and-a-half times greater than its share of the overall economy (5% of GDP).

“Retail has been the golden goose, generating tax revenues far beyond the industry’s size, but the current situation is not sustainable,” said BRC chief executive Helen Dickinson. “The Government should act to rebalance the system and ensure all industries are paying their fair share.”

Meanwhile, there has been a vigorous campaign from the Scottish business community for the Chancellor to cut alcohol duty. The campaign argues the 10.1% duty increase imposed by the previous government last year is having a “damaging impact” on Scotch whisky – one of the UK’s most important exports.

A letter sent to the Treasury from Scottish Chambers of Commerce, the Scottish Tourism Alliance, Scotland Food & Drink, UKHospitality Scotland, the Institute of Directors and Prosper said a duty cut for Scotch would "signal that Scotland is a competitive place to invest, would recognise the benefits of the sustainable employment for which the Scotch whisky industry is renowned, and would boost a central part of Labour's 'Brand Scotland' vision".

The arguments which have been strongly made on alcohol duty and business rates make a good deal of sense. Of course, businesses will always like to see less in the way of taxation – making money, after all, is the reason they exist. However, if a reduction in business rates or alcohol duty were to spark an increase in jobs and investment, it should, in theory, be good for the economy.

However, given the mood music which has consistently emanated from the UK Government since it took office, it would seem that support for business from Downing Street is unlikely to be forthcoming. If anything, there is a very good chance business will emerge with a heavier burden, amid mounting speculation that Ms Reeves is set to increase employer national insurance contributions in the Budget.

Leon Thompson, executive director of UKHospitality Scotland, said the Budget will be a "pivotal moment for hospitality businesses across the UK".

He told The Herald: "With talk of increases to employer national insurance contributions and an increase in the national living wage, it’s not surprising that our businesses are concerned. As a major employer, the hospitality sector will be hit hard.

“To support hospitality, UKHospitality has asked the Chancellor to begin fulfilling its manifesto pledge to reform business rates in England. As a first step we’re calling for the introduction of a lower, permanent, and universal multiplier for hospitality.

“If this happens at the UK Budget then we would expect the Scottish Government to make similar moves. The government in Wales has already opened the way by legislating to allow variable multipliers for different business sectors.

“The Finance Secretary, at the last Scottish Budget, committed to improve the business rates position for hospitality and we need that commitment to be made good.

“Regardless of what happens in Westminster, there is an opportunity for the Scottish Government to show leadership on 4 December, by reducing the poundage our businesses pay.

“This is a quick first solution to repairing a taxation system that penalises hospitality and holds back investment and economic growth.”

Over to you, Ms Reeves.