David Frost, Director General of the British Chambers of Commerce (BCC) gives his opinion on today's Budget and what it will mean for businesses.
“After two years of economic downturn, the Chancellor has clearly recognised the need to place business at the heart of this Budget. Doubling the annual investment allowance, help with business rates, and allowing entrepreneurs to keep more of their gains will prove especially popular.
“The Chancellor could have done more to set out a clear plan for the reduction of the budget deficit, which continues to threaten business confidence and investment.”
"The Chancellor's GDP forecasts for 2010, though slightly stronger than our own, are realistic. But, the official forecasts envisaging very rapid growth in 2011 and beyond are much too optimistic.
"Since the Chancellor's medium-term predictions for the public finances are based on growth expectations that many analysts would see as unrealistic, he may struggle to persuade the markets that his deficit-cutting plans are achievable without further measures.
"As envisaged in the BCC's recent economic forecasts, borrowing in 2009-10 and 2010-11 is very likely to be lower than the Chancellor predicted in December’s Pre-Budget Report. But the Chancellor's borrowing forecasts for subsequent years appear too optimistic and more detail will be needed to ensure that Britain's AAA credit rating is secure.
"The markets will also be disappointed that that some of the savings made from the lower than expected borrowing this financial year and next are being diverted to new spending plans, rather than actually cutting the deficit.
“The Chancellor will have to do more to persuade the markets that the health our public finances will be restored within a realistic timescale. The official deficit-cutting plans still lack sufficient credibility."
On the NICs increase going ahead:
“The Chancellor has missed a golden opportunity to boost to job creation and business growth by scrapping the planned NICs rise. Substituting the employer NICs hike – a tax on jobs – with a 1% increase in VAT would have largely offset the lost revenue, and it would have been less damaging to the productive economy.”
On the staggering of the fuel duty increase:
"Staggering the planned fuel duty increase will offer some comfort to hard-pressed businesses and their employees. Keeping fuel costs stable doesn’t just help road hauliers, but all businesses in keeping their costs manageable.
“With petrol prices spiking in recent months, the Government must tread a very careful path between sorting out the public finances and the real pressures facing businesses.”
On new lending targets for RBS and Lloyds:
"Bank lending is not a black and white issue. While many of the most serious issues around bank lending have been addressed in recent months, businesses still report some problems - and we must ensure that credit-worthy firms receive the financing they need to help drive economic recovery.
“If using gross targets helps to clarify how much money is actually getting to the businesses that need it, then it should be welcomed.”
On a credit adjudication service:
“This is a good move that will improve transparency in lending to small and medium sized businesses, especially where complaints and concerns still remain.”
On the creation of UK Finance for Growth:
“We have long said that there has been a gap between bank lending and the financial markets for dynamic businesses seeking to grow. This initiative will help provide these firms with alternative routes to finance – the first step in stimulating more high growth companies. The key will be a simple range of financing options so that business takes up the help on offer.”
On increasing SME access to Government contracts:
“Many smaller firms rely on government contracts, but they often find securing them is too difficult and time-consuming. Moves to increase the share of public contracts for SMEs will be well received. The challenge will be to turn this commitment into a reality.”
On measures to support business investment:
“We have campaigned for more support to promote business investment. The Treasury has clearly heeded our warnings on this issue.
“The doubling of the annual investment allowance will provide a shot in the arm for private investment this coming year, and it will be seen as one of the Chancellor’s better Budget moves.”
On an increase in capital gains tax relief for entrepreneurs:
“Allowing entrepreneurs to keep more of their gains over a lifetime in business will help foster a spirit of entrepreneurship at a time when we desperately need more focus on private enterprise.”
On a green investment fund:
“We support the creation of a green investment fund, and the principle of trying to bring together public and private money to finance infrastructure at a time when the public finances are in such a poor state. However, this fund should only be the initial step towards a larger national infrastructure bank, which would become a much more viable option for securing both our future transport and energy infrastructure needs.”
“It is vital that in the early stages of a new Parliament the next Government sets out a clear plan for the attraction of more private finance into infrastructure provision.”
On rebalancing the economy towards exports:
“After a decade of growth driven by the public sector and consumption, a fundamental rebalancing of the UK economy is required. Britain needs to export far more goods and services than it currently does and the Budget did little to aid this transformation.”
“The Government should have used this opportunity to introduce a state-backed short-term export credit insurance scheme to ensure our exporting businesses can compete more closely with comparable trading nations like Holland and Germany. Just co-locating UKTI and the export credit guarantee department is not enough.”
On a consideration to abolish the Default Retirement Age:
“Many companies need the Default Retirement Age to effectively run their business. The government must reassure employers that it will not be removed.
“It is the medium-sized companies that are most concerned at the prospect of losing the default age, which only triggers a conversation between employers and employees. These businesses are the engine room of the UK economy, and they must be allowed to get on with creating jobs and driving recovery without the constant threat of tinkering to employment law.”
On civil service relocation:
“Moving more of the public sector away from the capital could save money and help regional economic growth. However, these need to be substantial in size and scope to prevent unnecessary competition over a small number of jobs. This should not mask the fact that the public sector is too large.”