THE business world gave a virtually unanimous thumbs-up to the Chancellor’s Budget yesterday, praising its fiscal rectitude and lack of flashy pre-election gimmickry.
Lobbying bodies from the Confederation of British Industry (CBI) to the British Chambers of Commerce (BCC) and small business organisations had a positive take on George Osborne’s measures to help sustain the UK economic recovery.
John Cridland, the CBI director-general, said: “Stability and consistency are what businesses need to grow and prosper. This Budget sets the tone, providing a clear plan for fiscal health and growth.”
Cridland said the better picture on the nation’s finances had allowed the Chancellor to “recalibrate his deficit-reduction plans”.
He added: “In the next parliament this fiscal breathing space should be used to achieve intelligent reductions in public spending, together with much-needed infrastructure and innovation.”
The CBI chief said that, with business investment a crucial driver of growth, the Chancellor had signalled his intention to continue the annual investment allowance for businesses, and that the CBI wanted it to be made permanent in the Autumn Statement at £250,000.
“This will fire the UK’s economic kiln by spurring smaller firms to invest in plant and machinery,” Cridland said.
Osborne had already signalled his intention to cut corporation tax to 20 per cent from this April, and the CBI said this was “a meaningful step in making the UK the most competitive tax regime in the G20 and will help to attract investment”.
John Longworth, director-general of the BCC, said the Budget “recognises both short-term electoral horizons and long-term economic needs”.
He said: “The Chancellor’s focus on business growth and prosperity will receive a warm welcome from businesses of all sizes.
“Businesses in every corner of the UK want more sustainable public finances, and they also want governments to take steps to support growth.
“Once again, it appears that the Chancellor has pulled off a difficult balancing act, maintaining fiscal discipline while ensuring that necessary deficit reduction doesn’t undermine the UK’s growth prospects.
“Lower business taxes, allowances for investment and targeted support for sectors, regions and small companies all contribute to confidence, investment and job creation.”
Business was cheered by the Chancellor citing the decision by the independent Office for Budget Responsibility (OBR) to raise its forecast for UK economic growth from 2.4 per cent to 2.5 per cent in 2015. It has pencilled in 2.3 per cent for 2016.
David Kern, chief economist at the BCC said: “The latest OBR forecast is good news for the British economy. Compared to the last forecast, growth is stronger, inflation is lower and the speed of debt reduction is likely to be faster.
“These improvements highlight that, despite a weak patch in the final months of 2014, the economy is showing renewed momentum. The recent surge in tax receipts will also help the government meet its borrowing and debt targets.”
Various business organisations praised Osborne’s move to shore up Britain’s North Sea oil industry in the face of the plunging oil price since last summer, with a reduction in the petroleum revenue tax, and a cut in the supplementary North Sea tax charge from 30 to 20 per cent.
Osborne said the measures amounted to £1.3 billion worth of assistance for the oil and gas industry, adding: “It goes without saying that an independent Scotland would never have been able to afford such a package of support.
“But it is one of the great strengths of our 300-year-old Union that, just as we pool our resources, so too we share our challenges and find solutions together. For we are one United Kingdom.”
The Federation of Small Businesses (FSB) praised the decision to scrap annual tax returns, a significant piece of red tape for many businesses and self-employed people, in favour of a single digital tax account that can be checked online.
“This is something we have long advocated,” chairman John Allan said. “Implemented properly, this should reduce the time businesses take to complete their tax returns, and offers opportunities to deliver targeted support.”
The Chancellor’s abolition of Class 2 national insurance contributions for the self-employed was also welcomed by business organisations across the board.
Andy Willox, Scottish policy convener at the FSB, said: “We’ve long called for a simpler tax regime for small businesses and the self-employed. The abolition of Class 2 national insurance contributions is symbolically important – underlining the increasing importance of the self-employed.
“The Scottish Government should also modernise taxes currently devolved and pass the collection of business rates and council tax to Revenue Scotland.
“Lastly, ministers in Edinburgh should commit to a business rates review run in parallel to the one launched by the Chancellor. Most of the criticisms levelled at the English regime are equally applicable north of the Border.”
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