"The commentaries below are written in general terms. Details can also be found in our downloadable Budget Report brochure, which will be available shortly. You are strongly recommended to seek specific advice before taking any action based on the information given, both in the commentaries and in the publication."
Support for aspiring entrepreneurs as Britain opens for business and supports those buying new-build homes
“With very little cash to give away, there was some good news for entrepreneurs who will benefit from £2,000 reduction in employers’ NIC and an extension to SEIS for 12 months which will help individuals as well as small businesses receiving the funds. If they also drink beer they will feel cared for!” said Richard Mannion, national tax director at Smith & Williamson the accountancy and investment management group, on hearing the Budget speech.
He continues: “There will be more generous rules to support privately owned businesses which set up employee share schemes complemented by a move to equalise corporate tax rates between all companies irrespective of size from 2015. The latter will bring a helpful simplification of the tax code.”
“The abolition of Stamp duty on AIM shares will also help the enterprise economy and the cancelling of fuel duty will be of benefit to all and have a multiplier effect.”
“The government is also introducing a package to support the financial services sector, making the UK’s fund management industry more competitive. This shows the government has recognised the importance to the UK economy of this sector and would also support them through a marketing campaign highlighting benefits of the UK regime. The government will continue to fight contrived tax avoidance, having promised to name and shame aggressive promoters.”
Growth deficiency: lacklustre economy persists despite extraordinary monetary stimuli
“The UK public sector net debt is forecast to worsen from 71.8% of GDP in 2011-12 to a peak of 85.6% of GDP in 2016-17 according to the Office for Budget Responsibility (OBR). The net debt forecasts have deteriorated since the last Autumn Statement. This follows the sharp reduction in the real GDP growth forecasts from 1.2% to 0.6% in 2013 and from 2.0% to 1.8% in 2014,” said Michael Quach, investment strategist at Smith & Williasmon, as an initial comment on UK Budget 2013.
The UK economy has been stagnant over the past two years in spite of the extraordinary monetary policy loosening by the Bank of England (BoE).
The lacklustre economic recovery and the medium-term outlook continue to be hampered by the on-going deleveraging process in the private and public sectors, weak real income growth, muted export growth and the lacklustre credit conditions.
The fiscal measures announced by the Chancellor in the Budget are unlikely to have a big impact on the economic outlook. The Chancellor is instead advocating greater monetary activism from the BoE - by allowing the use of unconventional measures including explicit guidance on future interest rates – to boost growth in the economy.
Monetary stimuli are significant but, on their own, cannot guarantee an improvement in the economy as long as demand remains so weak. Notably, economic and policy uncertainties are causing households and businesses to significantly hold back on spending and hiring. The economy is thus expected to recover slowly, supported by an easing in credit conditions and an improvement in the global economy.
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