Today, Chancellor Phillip Hammond delivered his second budget and first Autumn Statement since the General Election earlier this year, in which he expressed a resolve to look forwards not backwards.
The future is expected to be full of change, challenges and new opportunities, it’s more than simply a plan for Brexit, but what does this mean for UK businesses?
Our take on the budget
"This budget was always going to have to strike a difficult balance, between increasing provisions for Brexit whilst at the same time, dialling down growth forecasts in coming few years. It was a mixed budget for SMEs.
"While there were some really positive messages, such as addressing several of the concerns regarding the business rates proposals and a collection of measures to get smaller housebuilders moving again, what was absent was any major initiative as to how we will fix the present skills shortage plaguing UK SMEs, especially as we embark on the ‘fourth industrial revolution'".
Peter Alderson, Managing Director, LDF Group
To ensure that the UK are ‘Brexit ready’, the government have set aside a further £3bn to aid preparations over next 2 years, in addition to the £700m already invested.
Whilst the economy ultimately continues to grow the forecast for UK economic growth has been downgraded from 2% to 1.5% in 2017. Subsequent growth forecasts have also been cut to 1.4% in 2018, 1.3% in both 2019 and 2020, before rising to 1.5% again in 2021, and finally reaching 1.6% in 2022.
UK debt (expressed as a percentage of Gross Domestic Product (GDP)) is also revised down to 2.4% for this year and is expected to further fall to 1.9% in 2018.
UK borrowing is down to £49.9bn this year, £8.4bn less than the forecasted £58.3bn outlined in the Spring Budget, and by 2023 it is projected that borrowing will hit its lowest level in 20 years to £35.6bn.
An additional £23bn of investment promised over the next 5 years to upgrade economic infrastructure, with a further £2.3bn allocated for R&D. The R&D tax credit will also increase to 12%, helping to support the ambition for industrial strategy and drive up R&D investment across the board.
£1.5bn has also been assigned to help small business housebuilders to build more new ‘affordable homes’, with a pledge to deliver an average of 300k new homes each year by 2025.
The Chancellor hinted at the ‘great pressure’ small businesses are under at the moment and as such, the VAT threshold will remain at £85k for the next 2 years.
UK businesses will also be better off by £2.3bn over the next 5 years as a result of bringing forward the switch from the retail prices index (RPI) to the consumer prices index (CPI) as the index used to calculate future increases in business rates by 2 years to April 2018. This is likely to help business save almost 1% on their business rates bills.
There is also a commitment to increasing the living wage rise (for 25 years+) to £7.83 from April 2018, a rise of 4.4%, which whilst welcomed by employees, may pose as an additional challenge for many small businesses
Finally, on the roads, the government offer assurance that the increase to the existing company car tax supplement on diesel vehicles will apply only to company cars and not commercial vehicles. Fuel duty is also frozen for the eighth year in a row, saving the average driver £160 per year.