The Chancellor introduced the theme of an "aspiration nation" in Budget 2013. How much impact will the measures announced have on reigniting the economy, sparking growth and increasing business confidence?
Michael Magee, Advisory Partner, talks through some measures announced by the Chancellor aimed at increasing business confidence, including the 20% corporate tax rate cut by April 2015 and support for businesses investing in R&D with an extended tax credit to 10%. But there was a lack of proactive measures tackling some issues of importance to our clients such as improving tax simplification or any specific measures to encourage export activity.
But in a difficult situation there was little room for manoeuvre.
Overall, this was a budget for people who want to 'work hard and get on', George Osborne alluded to an 'aspiration nation'. However it has a strong flavour of him 'doing his best' in a difficult situation, no 'magic cure'... and with a primary focus on achieving fiscal balance, he had very little room for manoeuvre.
There was a welcome new remit for the Bank of England - now focussing on growth with a more flexible target around inflation. There was also a suggestion of 'unconventional policy instruments' to support this objective
There was hope for significant supply chain reform - perhaps a step change in tax simplification, removal of red tape, lower administration burden for corporate Britain. They don't appear to be there in the way we would have hoped.
Corporation tax rate down to a standard 20% rate - part of his quest to increase the attractiveness of the UK, as place to do business - this is a positive move and a developing theme.
He was keen to emphasise levels of exports to growth markets such as BRICs - these are up two-thirds, echoing what we are seeing with our clients who are looking to these markets to stimulate growth in these markets, but there were no specific new measures to encourage activity here.
Good news in terms of R& D, the new credit, effective from 1st April this year will be extended to 10%. This should make a significant difference to companies when planning their R&D investment. This is again encouraging, particularly as the UK is increasingly a hub for research and development.
As expected the Chancellor has looked to investment in infrastructure as a way to inspire confidence - an extra £15bn for new road, rail and construction projects by 2020, starting with £3bn in 2015-16.
He has also inspired confidence in the home - with the 'help-to-buy-home' scheme and a mortgage guarantee scheme to support new homeowners and promote the 'aspiration nation.'
In the recent PwC CEO Survey, 80% UK CEO's said government priority should be creating and fostering a skilled workforce - beyond this we haven't seen any specific proactive measures to support.
However there have been steps to help early stage companies have access to finance - including measures around the Seed EIS scheme and extended Capital Gains Tax holiday.
So overall, a fiscally responsible and coherent budget from the Chancellor, suites of measures to support SMEs and the lower income households, a number of actions to build confidence in Corporate UK as a fair place to do business. Hopefully we will see a corresponding improvement in business confidence.
Comment below or tweet us at: PwC_UK using #budget2013.