“Backing manufacturing, backing exports, backing a more improved Britain”- Budget 2014
George Osbourne’s fifth budget as Chancellor of the Exchequer resulted in a string of optimistic figures leaning towards a rejuvenated British economy, with some encouraging news for SME’s in the process.
Before proceedings, the general prediction was that this was the Conservative’s last significant chance to display a brave show of authority before next year’s general election and tactically put a bit more money back into the pockets of the British public.
Mr. Osbourne’s first informed us that the economy is growing faster than any of our other European heavyweights at a faster rate than expected, with 2.7% growth in 2014. Defecit was also down by a third at 6.6% and a £5bn surplus is predicted by OBR (Office for Budget Responsibility) in 2018/19. However, whilst he warned that “the job of recovery was far from done”, Osbourne duly explained that we are seeing “the biggest upward revision to growth between budgets for at least 30 years” which is of huge significance and a great reason for optimism in the short term.
Central to the Governments plans is the manufacturing and export industries which were fervently reinforced in Osbourne’s speech. He explained “It is all part of a long term economic plan – a plan that is delivering security for the people of this country.” The manufacturing industry in particular is growing but it halved under the last government but Osbourne added manufacturers “have the full backing across the entire country.”
Savers and pensioners were arguably the most generously rewarded in the budget with it being announced cash shares and Isas were to be merged into a single New Isa with an annual tax-free savings limit of £15,000 from July 1st. For pensioners, a new Pensioner Bond paying market leading rates to be available from January to over 65’s, with interest rates of 2.8% for one-year bonds and 4% for three-year bonds.
Government borrowing was down at £108bn this year (£24bn less than forecast) with £95bn expected in 2015-15 whereas unemployment was down 66,000 with 1.3m more people in work. Personal tax allowance is to rise to £10,500 in 2015.
For businesses, The Annual Investment Allowance for companies will be expanded to £500,000 (at a cost of £2bn) until the end of 2015 whilst business rates discounts and enhanced Capital Allowances will be extended in enterprise zones for another three years.
Rates of the R&D tax credit for loss-making small businesses were raised from 11%-14.5%. Corporation tax was down to 21% with 20% expected next year and doubling of lending available for export finance to £3bn. Furthermore, in the two years of the Seed Enterprise Investment Scheme’s creation (created to help finance start up’s), great success has been noted and it’s been made permanent.
Mr. Osbourne went onto confirm energy costs need to be cut by investing in new sources of energy for Britain’s manufacturing to be competitive: “We are going to have a £7bn package to cut energy bills for British manufacturers. A resilient economy is a more balanced economy with more exports, more building, more investment- and more manufacturing too.”
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