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Business gives a Broad Welcome to the Budget

Last Updated: Friday, March 25th, 2011

George Osborne got the good press he’d have hoped for on Thursday morning from the Murdoch stable, the Daily Telegraph, the Daily Express and – broadly – the Daily Mail (although the critics began making their voices heard today). But what of business reaction?

The Institute of Directors welcomed “the acceleration in the reduction in Corporation Tax to 26 per cent” and “the very clear statement that the 50 per cent rate of Income Tax is a temporary measure”.  An IOD survey found that 58 per cent of respondents are more confident about the long-term economic outlook of the economy as a result of the Budget, and that 69 per cent believe George Osborne is doing a good job as Chancellor.

The CBI supported the corporation tax move, the changes to entrepreneurs’ taxation, reductions in regulation on businesses, the promise of a faster planning system, support for manufacturers through the Climate Change Agreements, and reduced fuel taxes.  However, it warned that “the increased tax on North Sea oil and gas could be counterproductive, and will create uncertainty for future investment.”

The British Chambers of Commerce also welcomed reductions on regulation, though it added that “we still have real concern over the amount of additional costs that businesses will face”, and said the Chancellor “missed an important opportunity to give employers greater confidence by cancelling the remainder of the planned employer National Insurance Contributions rise”, and that “unfortunately, the Chancellor did not maintain the £18,000 threshold for Empty Property Rates.”

The Federation of Small Businesses (FSB) said that the Budget “will help provide stability, but believes it didn’t go far enough to incentivise job creation”.  It welcomed the fuel, small business rate relief, apprenticeship, entrepreneurial and enterprise zone decisions, but regretted the decision not to extend the NICs holiday and wanted clarity on the small business corporation tax rate.

A Forum of Private Business survey found that 47% of respondents felt that the Budget was better than expected.  It gave the Chancellor the following success ratings: deficit reduction 84%, Enterprise 39%, Fairness 37%, creating a stable and certain business climate 29%.  Members gave strong support to the corporation tax, reversal of NI employers increase and review of employment law, but expressed concern about the effect of the VAT rise.

Oil and Gas UK said of the oil tax increase: “Today’s move in the Budget runs counter to the Government’s stated desire to promote growth, jobs and exports – all of which this industry was delivering and will now find much more difficult to sustain…At a time when we could see investment recovering following the last period of fiscal instability, this further shock will only damage investor confidence and make many question whether the UK is an appropriate destination for their investment.”

Forex.com said that “Gilts are stable at a low level, which shows that the markets like what they are hearing from Osborne, and they like his commitment to reign in the UK’s deficit. This is being rewarded as Osborne said, with borrowing rates the same as Germany while the UK’s deficit is more like the size of Ireland or Greece.  Overall, this was an extremely pro-business Budget, which included a series of cuts to the corporate tax rate during this Parliament. On a long-term basis this eradicates one reason to sell sterling as the UK’s economy gets more competitive.”

Finally, voter reaction.  YouGov found post-budget that although the Coaliton and the Chancellor are now viewed negatively, the Government is blamed less than Labour for the deficit and ahead of it on deficit reduction.  “The recent increases in Conservative support have continued in light of the Budget with the party now on 37%, four percent behind Labour on 41%. Lib Dems and others are both on 11%.”

Paul Goodman

 

HIGHLIGHTS FROM THE LAST WEEK ON CONSERVATIVEHOME

 

Today, Britain has a new foreign policy – and it isn’t neo-conservatism. It’s the politics of “it depends”. “This isn’t the politics of neo-conservatism, with its abstract doctrine of using power to spread democracy.  This is the politics of a specific situation.  If Ben Ali hadn’t been driven from Tunisia and Mubarak from Egypt, if there hadn’t been protests in Jordan and weren’t Saudi troops in Bahrain, Cameron’s response might have been different, and the background certainly would have been – there would, for example, almost certainly have been no Arab League support for a no fly zone.  Cameron’s risky but right decision has an on-the-hoof flavour.  It’s the product of circumstances, not doctrine.  It’s the foreign policy of “it depends” – Paul Goodman. Read more: http://is.gd/wPD0xM

Ten things you should know about George Osborne: “Is George Osborne going to make history?…The submarine strategy…Nick Clegg has soaked up the hatred that Osborne had expected to face…Osborne is largely based at Number 11 rather than at the Treasury…Cameron’s number two…The public image problem and the private warmth…Peter Mandelson concedes Osborne may, one day, become leader…The Brown/Osborne parallels and differences…The networking Osborne…His Plan A for the economy will sink his own submarine and the government if it goes wrong.” – Tim Montgomerie.  Read more: http://is.gd/lVDgzc

Mike Huckabee, a man to watch? “The time has come to look closely at Mike Huckabee. For a large number of people, his views will be considered extreme, and possibly bizarre, but Huckabee is testing the waters on a 2012 campaign and with some cause to be taken seriously.  There already signs that Palin may not run – the attempted trademarking of her name is widely seen as a move towards commercialisation rather than politicisation – and some quarters of the press are starting to tire of Sarah Palin.  Huckabee himself has bemoaned the fact that Palin gets all of the coverage when Huckabee is the more fluent candidate.” – Rupert Myers.  Read More:  http://is.gd/6MvEjE

The Daily Mail and its brand: “There is something about the Daily Mail that connects with people, wherever they live and whatever their social class.  I think this is less to do with the paper’s political outlook than about its consistency as a product, and the clarity and coherence of its narrative…When you buy the Daily Mail you know what to expect, and it delivers every time.  There is something very reassuring about this.  The same is true if you buy an Apple Mac, or indeed a Big Mac.  The lesson we should learn from the Daily Mail is not in the way it thinks about politics.  It is in the way it thinks about itself.” – Lord Ashcroft.  Read More: http://is.gd/XYIyRl 

George Osborne must stick to his deficit cutting strategy tomorrow – but it would be reassuring to hear that he has his sights set on tax cuts in the longer term: “In many ways, the best Budget the Chancellor could introduce would be one that did nothing.  The Chancellor has courageously set out his strategy over five years, moving Britain back towards budget balance, largely through expenditure cuts but also with some tax increases.  The overwhelming important task is to stick to that strategy…Alas, none of these taxes can be cut in the Budget tomorrow but it would be good to hear the Chancellor say that he has his sights set on at least some of them and recognises that lower taxes overall, is essential to Britain’s competitiveness and ability to create jobs.” – Lord Lamont.  Read More: http://is.gd/beSTYB

An A-Level Baccalaureate would ensure more students attained academically rigorous qualifications: “A “college track” to good universities and good jobs should start with the E-BACC of quality GCSES, where take-up should be increased by rewarding partial success. I propose this is followed with a new A-Level Baccalaureate comprising at least three academic A-Levels including an AS in Mathematics and an AS in humanities or languages. As many students now study 3.5 or 4 A-Levels, it will be possible to maintain the depth of A-Level whilst increasing the breadth. Universities need to play their part and be more explicit about what they want, and should publish the results of accepted and rejected applicants.” – Elizabeth Truss MP.  Read More:  http://is.gd/UY4D8p

Rating the Budget by the Thatcher, Tebbit, Lawson, Merkel and Reagan standards: “The big story should be to underline how serious Britain’s economic predicament is. During the Labour years Britain fell from 4th to 12th in international league tables for competitiveness. Although Britain’s best schools are world beaters, most of our children are getting a poorer education than their future competitors are getting in France, Germany and China. Millions of able-bodied Britons are on benefits, failing to fulfill their God-given potential and acting as a drag on every taxpayer and business in the land. If we don’t repay our debts the best and most talented young Britons won’t stay in this country…Things are really going to get worse before they get better and Osborne should have made that clearer yesterday as a way of building confidence in his understanding of the road ahead.” – Tim Montgomerie.  Read More: http://is.gd/vJ9qeX

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