‘Step in right direction in medium and long term’
JEREMY Hunt’s Spring Budget was “not as severe as predicted” but there was little help to address sky-high energy bills, Welsh business leaders have said.
In response to the Chancellor’s measures to boost economic growth, encourage people back to work and boost business investment, organisations in Wales said it was a step in the right direction but “the short term for businesses still looks very difficult”.
Ben Francis, FSB Wales policy chair, said the Chancellor was “playing a long game” with little to address “the immediate pressures plaguing small firms such as extending support for sky-high energy bills”.
He added: “One area that has caused considerable concern for small businesses is the planned rise in fuel duty, in which over half of firms we surveyed reported fuel as a main driver of rising costs. We are pleased the Chancellor listened to our calls and has announced fuel duty will be frozen. This provides small businesses with the breathing space they need to allow them to focus on growing their businesses.”
On investment zones, Mr Francis welcomed the intention of at least one investment zone in Wales, adding it was “imperative” both Welsh and UK governments identify how that model can help level up and grow small business enterprises in Wales.
“Some of the smaller measures announced today will benefit the economy, such as the tax on draught beer remaining frozen in pubs from August this year but given the pressures facing this important sector, further support will be required from governments as the year progresses.”
Paul Butterworth, Interim CEO at Chambers Wales, said the Budget was “a step in the right direction for firms in the medium and long term”.
“However, the short term for businesses still looks very difficult. Energy bills will increase in April as support is reduced, putting firms at risk; the super deduction will end; and corporation tax will rise to 25%. The announcement of full capital expensing is fantastic for businesses across the UK who want to invest in their own growth, but it remains to be seen how much this will mitigate the rise in business rates.”
Jack Parker, senior executive at Welsh independent accountancy firm, Bevan Buckland LLP, said the measures were “not as severe as first predicted”.
He said: “The announcement of £80m of investment into 12 investment zones for businesses, which could see them paying a lower tax rate while they operate within these zones, will undoubtedly give many businesses something to consider in the coming months. And with the end of the super deduction for capital allowances, businesses are also set to benefit from a new full capital expensing scheme over the next three years.
“However, this does contain some element of misdirection, as the new scheme will only be of real benefit to businesses who spend more than £1m per annum on capital expenditure.”
Robert Lloyd Griffiths, director of ICAEW in Wales, said: “Today’s Budget certainly brings some welcome news for businesses in Wales with research and development incentives, an increase in the small business investment allowance and the introduction of at least one new investment zone along with funding for carbon capture and storage pilot projects in north Wales.
“We’re not out of the woods yet but with the economy expected to now avoid a technical recession and inflation predicted to return to more normal levels, the headlines of today’s budget should certainly help to boost business confidence.”