Mick Jagger once said, ‘You can’t always get what you want, but if you try sometimes, you get what you need.’ Perhaps the Rolling Stones singer best describes the Chancellor’s latest budget, where many businesses would have liked more direct stimulus for growth, but a steady hand was required given the global economic outlook.
With a £9 bn tax break for businesses, an increase in the availability of free childcare, and a surprise pension hike for the wealthy, Jeremy Hunt’s budget was unapologetically optimistic.
The many manufacturing businesses we have supported will welcome the proposed 100% tax relief for company investment, targeted to boost the nation’s slow growth rate.
While any company struggling to recruit the staff they need to grow will welcome the two significant initiatives aimed at preserving employment: a £5 bn extension of the availability of free childcare in England and the elimination of the £1 million lifetime cap on tax-free pension contributions.
As ever, the devil is in the detail, and it will be weeks before the full implications of the budget are clear. While the quick fixes suggested in the budget to solve the labour crisis are welcome, they may need more time to fix the labour gap, which requires structural investment.
Childcare remains too expensive, and the funding of free childcare places will only exacerbate the current shortages.
The economy needs to rebuild confidence after recent shocks. Indeed, we can all take the positives from its current resilience. Tackling inflation is essential to giving businesses the confidence they need to plan and grow. If the Chancellor can get inflation below 3% by the end of the year, it will be a massive step forward.
The OBR predicted that the national debt as a percentage of GDP would decrease. Peaking in 2023–2024, national debt as a percentage of GDP will then gradually decline through the end of the forecast in 2027–2028, which will give the government more headroom for tax cuts before the next election.
While West Yorkshire is set for an Enterprise Zone, it’s too early to see which sectors will benefit and how, although we’d all welcome another Canary Wharf springing up on the banks of the River Aire. The region will benefit from greater devolution and the spending power that comes with it. Anyone who has sat on the M62 for a few hours knows that efficient transport links are crucial to productivity.
The opportunities that arise from the growth of the green economy are clear, and the announcement of an investment of up to £20 billion over 20 years is to be applauded. Yorkshire has businesses well positioned to lead in the future hydrogen and carbon capture industries.
Many entrepreneurs will be unhappy with the rise in corporation tax, but little can be done about it now. So over the coming months, it will be essential to focus on business fundamentals and work hard.
Perhaps it’s damning with faint praise, but the UK needed the ship to be steadied with a budget that wasn’t too racy. It may not solve the macroeconomic challenges we face as a nation, but it’s a start.