The Chancellor has just sat down after delivering his Autumn Statement. I will leave others to report on the detail but to me it was a fair and very business-friendly budget.
The headlines will undoubtedly focus on the revisions in growth. Indeed now a forecast decline in GDP of 0.1% this year and growth of only 1.2% in 2013 and 2% in 2014. It’s also going to take at least a year longer to remove the ‘structural deficit’.
For all those readers who have significant exposure to the public sector, the further reduction in departmental budgets, by 1% next year and 2% the year after that, will disproportionately affect back office spend as HMGovt goes to great lengths to protect front line services. This is a two-edged sword for SITS providers. Easy to look on the black side but also providing great opportunities for those capable of helping HMGovt to work more efficiently.
For UK business there was much good news with yet another reduction in Corporation Tax to 21% - the lowest of almost any country in the developed world. There is also a 10-fold increase in first year capital allowances – from £25K to £250K. That could allow many SMEs to bring forward investment in hardware and software.
Increased infrastructure spend could also benefit our sector with more money spent on superfast broadband, new schools and FE colleges. UKTI will get a huge boost to help UK companies export to the BRICs in particular. £600m more will be pumped into the UK scientific research infrastructure.
Also, it is likely that ISA savers (who get an increased allowance to £11,500) will be able to invest in AIM shares. That just might give a boost to tech stocks although the wisdom of holding AIM stocks for the average ISA investor is suspect.
To pay for this there will be increased emphasis on reducing tax avoidance and capping benefits. High earners will be hit by reductions in tax free pension contributions and a reduction in the cap from £1.5m to £1.25m – but, frankly, this is unlikely to affect more than the richest 1% of society.
The UK finds itself in a difficult hole. My own observation is that we seem to be climbing out of it rather better than many of our trading competitors. Unbelievably, the UK is considered something of a safe haven. The huge and welcome increase in private sector jobs is much to the Govt’s credit. As I have said countless times, the best of our companies are actually doing very well. This is a budget that just might help them do even better. It certainly was ‘business-friendly’ and, as I said at the start, ‘fair’.
I probably can’t ask for much more!