‘It is not entirely clear who this Budget is really for’
‘It is not entirely clear who this Budget is really for’
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It is not entirely clear who this Budget is really for. There are a mix of backloaded taxes that will impact various people while there is no real standout boost for business.
The leaked OBR report highlights reduced profitability for smaller businesses in its forecast which is concerning.
The main question is will businesses and the markets see this Budget as drawing a line under the tax rises and uncertainty which has held back business investment and spending?
The jury is still out on that. With the tax rises being backloaded, particularly the income tax threshold freezes, that means there is still a budget deficit for the next couple of years.
I am not 100% sure that has drawn a clear line under all the uncertainty. The OBR report is full of risks to its assumptions.
The chancellor has talked about putting more control back into local and regional hands, with 13 billion pounds of flexible funding.
Welsh firms will want to know how this will convert into practical support.
Businesses that fall within the industrial strategy will likely be able to access funding and support but the details are not yet clear, along with questions about how this will filter through the devolved countries.
Several of the tax changes will clearly affect business decisions. Salary sacrificed pension contributions above 2,000 pounds will now face National Insurance.
Taxes on dividends, savings and property income are rising by two percentage points.
The main writing down allowance in corporation tax is being reduced and capital gains relief on sales to employee ownership trusts is tightening.
These measures raise billions and will influence investment, hiring and planning across. Businesses impacted by these changes will have to try and figure out the individual impact to their plans and budgets.
Welsh businesses want to see reform to the planning system to unblock the construction sector, a focus on skills, reduction in energy costs, rates relief and simplification of the political landscape.
None of that is the direct purview of this Budget. The big question is how businesses will react. Messages I have received so far are ambiguous at best.
Our members are clear. They need confidence and a stable environment so they can get on with doing business.
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