Expotel chief executive Ian Burnley evalutes the impact of the budget on the corporate travel sector...
This was a budget built not to ‘rock the boat' before the upcoming election, although the £24bn ‘black hole' of public services debt revealed will have done little to boost the all-important and much-discussed confidence factor so vital to recovery.
The Treasury has admitted that only a third of the £35bn savings target set in 2008/9 has been achieved in the first two years, leaving £24bn for 2010/11 plus a further £20bn allocated for efficiency and productivity-related savings.
And of central concern to all is the lack of measures being taken to reduce the massive budget deficit due to reach £167bn this year - a snapshot poll by the Forum for Private Business just after the budget suggested that 87% of its members felt that the Chancellor's measures will not increase business and consumer confidence.
More than two thirds (70%) of respondents said they expect a more realistic budget to be delivered after the general election expected in May.
So there are two dimensions to bear in mind. One is the knowledge that things will get worse, and the other the uncertainty as to just how much so.
Inevitably and seriously affected by the need for cutbacks will be the public sector (and contrary to stated intentions I believe it is unlikely that the NHS and schools will remain untouched).
Every department will find itself under increasingly intense pressure to reduce costs and the travel purse won't be ignored. Already carefully scrutinised, every arrangement will require ever more justification.
And in the corporate world as higher earners (hit by increased income taxes) who will inevitably often hold senior positions within business, start to feel the pinch, ‘jitters' may spread from their homes into the business environment resulting in the tightening of spending, which will cause ripples in private sector confidence.
It is likely that a significant knock-on factor for business travel and meetings, also driven by fuel prices, will include a growth in the uptake of video and online-conferencing options.
From the buyer side, programmes redesigned to include budget properties as well as no-frills travel will be among the first developments to look out for.
Indicators of return-on-investment on all forms of business travel will become essential. Early anxious reactions from suppliers may result in more special, value-added offers and dynamic pricing over the coming months - an opportunity for buyers to book ahead perhaps?
On a brighter note, proposed increased SME spending, the relocation of at least 15,000 civil servants to areas outside London, as well as some tax relief initiatives, may result in some new opportunities for business travel over the coming months.
Travel, like most sectors, wants to avoid the words ‘double dip', but with confidence being hit coupled with the public sector spending reductions, signs from this ‘no' budget are that recovery will be slow.