Britain’s GDP is forecast to grow by 2.7 per cent this year, with similarly strong growth predicted until 2018. So very few giveaways were expected, due to the state of the economy and the continuing program of austerity.
“The message from this budget is this: You've earned it, you've saved it. This government is on your side,” said George Osborne, the Chancellor.
He announced that the annual 100 per cent tax allowance for investment has been doubled to £500,000, in a boost for business. He said the increase meant the majority of UK businesses would get investment tax breaks.
The amount of government credit available to support overseas sales has also been doubled, to £3 billion, and the rate charged on that credit cut.
The government also announced that the new Business Bank has designed a guarantee scheme to promote greater lending to small and medium sized companies (SMEs).
Osborne also vowed to help businesses with changes to export finance, incentives to business investment, help with energy costs, a further clampdown on tax avoidance and a shakeup of air passenger duty.
Additionally, investment in the UKTI's Global Entrepreneur Programme will be extended by £2.4 million over two years, which aims to attract start-ups to the UK.
The government also wants UK exports to reach £1 trillion by 2020, and for 100,000 more UK companies to be exporting by 2020.
“Britain has 20 years of catching up to do, so today we back businesses who invest and export,” said Osborne.
“We need our businesses to export more, build more, invest more and manufacture more. We will not have a secure economic future if Britain does not earn its way in the world.”
Much of the reaction through on the Budget has been positive with regard to the impact on SMEs.
The CBI, the UK's leading business organisation which represents 240,000 businesses, praised the tax credit: “The extension of the R&D tax credit will boost early stage, innovative businesses which can often be loss-making in their early years,” read a statement.
The Seed Enterprise Investment Scheme (SEIS), which offers tax breaks to SME investors, which was launched by the government two years ago, was also granted permanent status during the Budget speech today.
“The Budget will put wind in the sails of business investment,” said the CBI statement. “The government has heeded our call to make the SEIS permanent, to boost the range of financing options available to growing businesses and spur greater use of equity finance in small firms.”
However, Grant Thornton UK LLP, the leading business and financial adviser, expressed disappointment. “He [the Chancellor] certainly could have gone a lot further to support UK businesses – particularly small and mid-market organisations' ability to access finance for growth,” said David Hewitt, a Transaction Tax Partner at the company.
“Nothing was mentioned in terms of supporting or even directing banks or alternative lenders to help UK businesses expand.”
David added that large corporations need to support SMEs through financial aid. “We want to see SMEs grow and large businesses can play an active role in supporting this growth by investing in them and nurturing innovation,” he said.
“Big business is a key financier of small business. Initiatives such as the Corporate Venture Scheme, offering corporation tax and loss relief, would encourage larger businesses to help foster the next generation of UK PLCs.”
Criticism was also directed at a lack of reform for business recruitment policies. The government announced stricter visa controls for international graduates last year.
“Innovation is the lifeblood of British business and employers are in a constant battle to source highly trained employees,” said Amanda Flint, Employer Solutions Partner at Grant Thornton.
“More support for developing skilled employees in the form of support for post-graduate studies… is welcome. But [the] government needs to take the lead from business and not the other way round."