Chancellor George Osbourne delivered this year’s budget to the House of Commons yesterday appearing to have the look of a man who believed his time had come. It was as though he felt that he had come through a difficult patch and was now able to deliver a series of measures to add strength, breadth and vitality to the on-going recovery in the UK economy.
One of the key tenets of this year's budget was to take "decisions that will support businesses to invest, export, and create jobs – laying the foundations for sustainable economic growth." He confirmed that the economy is growing faster than predicted and that expectations for growth this year and next have been revised up by the Office for Budget Responsibilty – to 2.7% in 2014 and 2.3% in 2015.
In terms of what he offered for businesses in this year’s budget, the chancellor announced a package which he said would her Britain get back to being a manufacturing nation.
“We’ve got to support our manufacturers,” Osbourne said, “if we want to see more growth in our regions. To those who say manufacturing is finished in the West, I say: look at America, which will see up to five million new manufacturing jobs by the end of this decade.”
In short, the key budget elements for business are:
– a £7billion package to cut energy costs
- a doubling of the 100% Annual Investment Allowance to £500,000 to the end of 2015
- a £3billion package to help create £1trillion exports
The chancellor said: "We're not going to have a secure economic future if Britain doesn't earn its way in the world," he said. "We need our businesses to export more, build more, invest more and manufacture more."
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INDUSTRY COMMENT
John Cridland, the CBI director-general, said:
“The budget will put wind in the sails of business investment, especially for manufacturers. This was a make or break budget coming at a critical time in the recovery and the chancellor has focussed his firepower on areas that have the potential to lock in growth. The doubling and extension of the Annual Investment Allowance, together with making the seed enterprise investment scheme permanent, will be a shot in the arm for many medium-sized businesses.
Darren Jukes, PwC UK manufacturing leader, commented:
“The budget announcement has been good news for manufacturers. The roll back on green taxes and exemption from carbon costs will go a long way to helping businesses become more competitive. The chancellor highlighted the manufacturing renaissance in the US and this is something that we are more and more confident of emulating in the UK. The £7 billion package to cut energy costs will have a positive knock-on effect on employment. Job creation in the sector hit a 33-month high in February and the latest announcement gives me confidence that this trend shows no sign of reversing. George Osborne wants a ‘Britain that is making things again’. If today's plans towards achieving this, we can expect to see an economic recovery supported by factories the length and breadth of the country."
Phil Orford, chief executive of the Forum of Private Business, said:
“The headlines for business today are on energy policies and export. There are sizeable gains for UK manufacturers here in particular over the next few years. On exports, the chancellor has thrown his weight behind getting more businesses exporting. Our membership is confident about growth but much of that growth is UK based so we needed to see such a commitment, though we will continue to work with the Treasury and others to develop even healthier export subsidies for business.
“Overall this was a budget that offers some help to all levels of business, with perhaps a slight focus on the mid-size energy intensive and manufacturing businesses, rather than the very small ones. However, it does help to tackle the cost of energy and makes good on the commitment trailed before the budget to support those that look to invest, either in the UK – with a more extensive Annual Investment Allowance – or abroad, with a £3bn export support budget.”
John Allan, national chairman, Federation of Small Businesses, said:
“This was always going to be a ‘steady-as-you-go' budget for business, designed to get the UK's financial affairs in order. The chancellor delivered a budget to maintain positive momentum in the economy, while incorporating fiscal prudence. Today's budget offered a clear signal for businesses to grow through the increased investment allowance, and with a focus on manufacturing. The £7bn package to cut manufacturing energy bills will help create jobs and strengthen this key sector.
“That said all small businesses need to be bold and brave in 2014. Following today's fall in unemployment, we know more than half of our members have aspirations to grow with many wanting to recruit and pay more too. The chancellor set the pace towards some progress but there is still more to be done to get the economy and public finances back on track.”
"Reducing the corporation tax rate will make the UK a more attractive investment opportunity for overseas investors. And, with around 57% of FSB members wanting to grow in the next 12 months, doubling the Annual Investment Allowance for small firms to the end of 2015 will provide certainty and allow them to realise their investment expectations.
Terry Scuoler, chief executive of EEF, the manufacturers’ organisation, said:
“The chancellor said this would be a budget for manufacturers and he has delivered on his word. The Government clearly recognises the need to make the competitiveness of the UK a priority. We argued strongly for the need to reduce the rising cost of energy faced by many companies, and he’s acted on that. Taken together with measures to boost investment, exports and skills, the chancellor deserves a pat on the back.We have always said that to achieve a resilient recovery Government must back manufacturing and we’ve seen that from this budget.
“We now have some of the building blocks in place which will help rebalance the economy. But, as the chancellor suggests, there’s still more work to be done. We now need to take steps which will lead to longer term solutions beyond current spending and electoral cycles. This will finally give business the predictability and certainty to encourage the successive rounds of investment our economy needs.”
Tell me how you think furniture and joinery businesses will be affected
