Chancellor of the Exchequer George Osborne’s fifth budget promised more benefits for the business community as he continued to push for economic recovery.
Amongst the forecast actions stemming from his announcement on 18th March were expected to be:
- New tax reliefs on investment for small business;
- Renewed funding for UK Trade and Investment at a time of departmental cut-backs elsewhere;
However come budget day there were a few surprises in store:
Beyond the promised targets and aspirations… doubling UK exports to £1tn by 2020, and the now familiar refrain of SMEs being the engine room of the UK economy, some real, tangible actions were announced that whilst they did not fundamentally change the business landscape, did provide some relief for hard pressed businesses.
In announcing his determination to increase the export rate from UK business, Osbourne said:
“For many firms, the truth is you can only win the contract if you are backed by competitive export finance. Instead of having the least competitive export finance in Europe we will have the most competitive,”
To underpin this he announced that the UKTI measures would amount to a £3bn fund, with interest rates slashed by 1/3 to encourage take up and use and boost the UK as a major exporter. This move proved to be a significant advance on expectation.
The CBI gave the measure a cautious welcome saying:
“The doubling of the direct lending scheme and the cutting of its interest rates should strengthen the UK export finance armoury. The government must now work much harder to promote these schemes, since many fast-growing firms are unaware of the support available.”
For smaller business, not yet branching out into the export market there was still positive news. New tax reliefs were announced that doubled the annual tax-free allowance for equipment investment to £500,000. In addition tax breaks and business rate discounts were launched for the government’s much-heralded enterprise zones. And for small companies a rise in the their tax credit for R&D to 14.5% from the current 11% rate was announced.
And finally in a move that will please long suffering energy intensive businesses in the industrial sector such as steel plants, chemical plants and paper mills, Osborne promised to cut businesses’ energy costs by £7bn with the decision to freeze the Carbon Price Floor meaning that at least one element of the inexorable upward pressure on business energy bills will be relieved.
Unsurprisingly this was warmly welcomed by the industry with Melanie Leech, Director General at the Food and Drink Federation saying:
“These changes will provide welcome relief to businesses large and small throughout the UK’s largest manufacturing sector and reward those who invest in energy efficient technologies,”
The backdrop to the 2014 budget was a more positive one than in previous years. The Office for Budget Responsibility upgraded its 2014 growth forecasts to 2.7pc, from a November estimate of 2.4pc, while growth in 2015 is forecast to be 2.5pc, from 2.2pc.
It has been described as a budget for business and pensioners, there can be no complaints on that score on what has been delivered however as ever there is an awful lot more to do in the coming months and years to return to the buoyancy of years pas