Thursday, 7 May 2009
Ayrshire Chamber’s reaction to the Budget
From: Martin Cheyne
Ayrshire Chamber chief executive
THIS year’s Budget statement by the Chancellor of the Exchequer Alistair Darling was one of the most highly anticipated for many years. In the midst of perhaps the most severe recession since the Second World War, Scottish businesses were looking for clear signals of support from the UK Government and evidence that national policy was developing quickly enough to keep pace with the rapidly evolving economic challenges that we are facing.
[Pictured: Martin Cheyne, Ayrshire Chamber chief executive.]
So did the Budget deliver for business? Well, partly. The decision to double first year capital allowances on investment from 20% to 40% this year is great news for businesses who have been hesitating over decisions on new investment and this could nurture the seed corns of future growth. Also welcome is the extension of the scheme to lengthen the period over which businesses can offset current losses against the profits of previous years, whilst the expansion of the trade credit insurance scheme should also assist firms in their day to day operations. In addition, there was an underlying focus on skills and training which was particularly welcome in the current labour market.
However these benefits come at a price, and this will have to be paid in both the short and longer terms. For Scottish businesses, the decision to raise Fuel Duty by 2 pence this September, followed by a further rise next April, is extremely bad news and will add further to business costs at a time when it can least be afforded. Similarly the increase in alcohol duty by 2% has done little to raise the spirits of either the hospitality sector or our food and drink industry.
And what of the bigger picture? Spiralling borrowing and national debt will at some point have to be paid for, raising the prospect of high taxation and reduced Government spending for years, perhaps decades, to come; and while the decision to impose a 50% Income Tax rate on those earning above £150,000 per year will affect only a very few people, the message it sends out about the UK’s attitude to entrepreneurship and success could be a potential impediment to future growth.
Nevertheless we hope that the Chancellor’s forecast of an early return to growth prove to be well founded. Certainly in the Chambers of Commerce’s own Quarterly Business Survey we are beginning to detect some glimmers of hope for the future, with a significant number of our manufacturers predicting an increase in exports by the Spring of 2010. One thing that is for sure is that it will be our businesses that will lead the way out of this recession and restore the Scottish economy to a path of solid growth. We will take the positives from this year’s Budget and move on. There is a challenging task ahead for businesses, but the signs are good and we will work together to ensure that the Scottish economy is stronger and well equipped to take full advantage of the opportunities ahead.
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