Budget 2013 Reaction
George Osborne’s fourth budget has been recommended to the House.
Overall, the economic growth expectation has been cut in half from 1.2% in December to just 0.6% for the rest of the year although the independent Office of Budgetary Responsibility (OBR) has predicted that a triple dip recession will be avoided.
Growth is expected to return to above 1% next year though and reach 1.8% with that rate climbing and being sustained above 2% every year beyond that.
One positive piece of news has been the scrapping of the "beer duty escalator" which has increased the price of a pint by over 40% in the last 5 years. This will inevitably reduce the pressure on publicans and Britain’s pubs, many of which have closed at an alarming rate.
Alex Jackman, policy advisor at the Forum of Private Business (FPB) said of the move:
“Coupled with the shelving of September’s fuel duty increase, this news will be music to the ears of those landlords in outlying rural areas who rely on customers travelling out to them.”
As Jackman noted, the fuel duty rise planned for later in the year has also been dropped. The Road Haulage Association‘s Chief Executive Geoff Dunning welcomed the freeze on fuel duty:
“This is another massive achievement for the road haulage industry and the FairFuelUK campaign, which the RHA co-founded three years ago. We have transformed the debate around fuel taxes.”
The Chancellor did not address the issue of business rates, much to the chagrin of the FPB. Spokesman Rob Downes said that business rates had risen by 13% over the last 3 years and failure to halt the next increase in April was doing damage to businesses:
“Business rates have risen so much in just a few years they are the number one enemy to many small firms, and we believe are a big part of the problem behind the problems with our high streets too. It’s disappointing to see no action here – it was the obvious way to relieve pressures and is a missed chance for quick and easy relief for business.”
House builders welcomed the budget with shares in the sector rising on the stock market at the news. Money has been shifted to address shared equity schemes and to be spent on infrastructure.
John Cridland, the CBI’s Director General, welcomed the news, saying;
“This was recognition it was a mistake to cut capital spending so sharply and that other growth-boosting measures were taking too long. But by shifting £6bn to housing and infrastructure, the Government has sowed the seeds for growth and jobs.”
Cridland wasn’t so damning of the failure to address the business rates issue, but did recognise the increase in the tax bracket from £9,440 to £10,000:
“Small and medium-sized businesses will be particularly encouraged that there was money available for the Chancellor to cut the jobs tax through a new employment allowance.”
Elsewhere, the Corporation Tax rate has been reduced by a further 1% which will bring it down to 20% by 2015. The move is expected to make the UK one of the most attractive places in the world to do business with the low corporate tax rate.
George Osborne has also promised to increase procurement from small businesses at a rate five times that of current levels, plus he has said that nearly half a million small businesses will pay no employer National Insurance.
Furthermore there will be tax relief for investment in social enterprises in a bid to encourage more investment into that sector. Peter Holbrook, Social Enterprise UK’s CEO, said:
“The UK is at the forefront of social investment and we’ve already got in place Big Society Capital, the world’s first social investment bank with £600million to lend. Our peers in other countries, particularly the United States, are very interested in the progress we’re making.”
For the full data from the budget, see the Budget 2013 – Annual Tax Rates and Allowances article.