ICAEW Priorities for Economic Recovery Budget
The ICAEW has today urged the Chancellor to ensure his next week’s Budget is focussed on building a stronger recovery. The call comes as recent exports and inflation data has contributed to fears of a double dip recession and as economic growth remains fragile.
The ICAEW has said that the Chancellor should:
- Make no major tax changes for businesses
- Timelines confirmed for government schemes to help businesses plan
- Manage public spending better to help tackle the deficit
- Not unintentially damage UK competitiveness
- Be firmer in tackling the problems impacting on businesses’ ability to grow
The Budget should not add to the regulatory burden for companies. The change in the VAT rate in the 2008 Pre-Budget Report caused implementation headaches for many small businesses at a time when they least needed it. The changes then had to be reverted a year later. The ICAEW wants no further complexity to be made to the tax system, when it is already over complicated.
As confidence returns, businesses more than ever need to be able to plan ahead. At the moment it is very hard for them to do this without knowing how long government-assisted schemes will continue for. Companies do not know how long the Enterprise Guarantee Scheme will last for nor when HMRC will become stricter on later payment of tax on the ‘Time to Pay’ facility. The ICAEW would like timelines, start points and end points to be confirmed on all schemes introduced to help the country’s businesses.
While significant spending cuts may be necessary to tackle the public deficit, deeper problems exist with the financial management practices of government. Ministers, parliament and decision makers across the public sector lack information about what exactly was spent and how well it was spent. The ICAEW would like to see more transparency and scrutiny of projects to help encourage better efficiency.
As businesses globally come out of recession, many will be seeing it as a good time to review their products and markets. The Chancellor needs to ensure that any new measures introduced in the budget do not damage the UK’s standing in the global marketplace, especially at a time when it is an attractive place to do business due to the exchange rate.
Cash, working capital and funding are as important when growth returns as they were when the recession first hit. Although there has been improvement, access to finance continues to be an issue especially for small businesses. Banks are also increasingly reviewing terms for loans and raising fees and charges. The ICAEW would like to see greater consistency and transparency in the relationships between banks and companies and believes the government can assist this.
Michael Izza, chief executive of the ICAEW, said:
“Both the Budget and the General Election have the potential to create instability, threatening the fragile economic recovery. The Chancellor needs to make sure that anything he announces on the 24 March does not have an unintentional, adverse effect but instead is focussed on helping to get the recovery going again.”
For information on the Budget, please go to www.icaew.com/budget
For advice for businesses to take advantage of the economic recovery, please go to www.icaew.com/economicrecovery