BUDGET: Business leaders
SUPPORT FOR RECOVERY AID – BUT TAXES WILL RISE LATER
BUSINESS leaders and politicians have given a cautious welcome to the Chancellor’s plans to stimulate the shattered economy.
They said the business-friendly approach could help the UK out of the biggest financial hole for generations – but with warnings further tax rises would be inevitable once the pandemic is over.
In his 2021 Spring Budget, Rishi Sunak said he was extending furlough to September and providing £5 billion in restart grants to help businesses reopen.
He said the business rates holiday for retail, hospitality and leisure will continue until the end of June.
Those and other measures, he said, added up to a £65 billion pandemic lifeline.
But he said the tax burden would increase to its highest level for over 50 years and warned taxes on business profits would be increased from 2023, while income tax thresholds would be frozen, which will result in more people contributing.
He told Parliament the economy would recover by mid-2022 – six months sooner than previously forecast.
But he said the UK borrowed £355 billion this year – the highest level since the Second World War.
The country will borrow a further £234 billion next year.
East Midlands Chamber chief executive Scott Knowles called it a “business-friendly Budget” that not only supported businesses now but would also help them “grow, invest and innovate” post-Covid.
He said: “Policies such as the restart grants and extensions to furlough, the business rates holiday, and VAT cut for hospitality and leisure – as well as the way in which they will be phased out – will remove the cliff-edge many companies had been facing and help them get over the hump of reopening.
“For smaller outfits in hard-hit industries such as hospitality that may have been wondering whether it would even be worth reopening, such measures will hopefully provide the confidence to persevere.
“However, there’s a risk this will come too late for some businesses, with a large number having already folded, so we need to ensure financial interventions reach these companies as quickly as possible.
“We know there have been many self-employed people who have been left out of previous support packages, so extending schemes to include another 600,000 people will be a great relief for those who have been hit harder than others over the past year – although there will still be a significant support gap that needs to be addressed.
It’s encouraging to see levelling up remains high on the government agenda and the new national infrastructure bank and Towns Fund signals positive intentions.
“However, it’s important the government doesn’t just believe it can achieve true levelling up by relocating some departments to towns and cities in the regions and instead throws its weight fully behind strong infrastructure schemes like HS2 – with a decision still due on the future of the Eastern Leg.
“The obvious downside for businesses is the rise in corporation tax to 25 per cent, but the fact this won’t come into effect until April 2023 means this shouldn’t damage the economic recovery.”
MaryClaire Morgan, sales manager at Nottinghamshire housebuilder Peter James Homes, said support for the housing market was “fantastic”.
She said: “The extension to the stamp duty holiday and the government guarantee on 95 per cent mortgages, will bolster an already exciting first quarter for property development and sales.
“These schemes both encourage and offer a better opportunity to buyers, allowing them to get into the property that is right for them. The announcement instils more confidence in the housing market overall.
“Extending furlough is also a great initiative. We have been lucky enough not to have had to furlough any staff since the first lockdown, as construction was allowed to con