Chancellor George Osborne gave his much-anticipated Autumn Statement yesterday. Our Accounting team have provided their expert insight into the speech, and how it might affect you.
From a certain perspective, the Chancellor’s tenure has boiled down to this very moment. He has been tasked with navigating the UK through an economic slump that no British Chancellor in recent memory has had to face.
And, though some may have hoped for more rapturous announcements by the young Conservative, Osborne’s speech adroitly navigated calls for increasing spending in light of recent gains. These giveaways, which our Accounting team detail below, were tempered by post-recession clawbacks. Focus remains very much on reducing the enormous deficit the UK still faces.
In the words of Roger Bootle, Managing Director of Capital Economics, “I was expecting George Osborne to have the grin of a Cheshire cat but he didn’t. Admittedly, for a while he sounded a bit like Gordon Brown in his pomp, with boasts about the UK being the fastest-growing member of the G7.”
To be fair, there was an element of measured brazenness in Osborne’s speech as he lauded his party’s gains, supported heavily by the Office for Budget Responsibility (OBR). These gains underlined the relative progress the UK is making in comparison to its major trading partners from across the North Sea – and even the Atlantic. But they also underscore the risks posed to the UK from abroad, much of which stem from the weakness of its Eurozone trading partners.
“I can report that Britain is currently growing faster than any other major advanced economy. Faster than France, which is contracting. Faster than Germany, faster even than America.”
As expected, business relief was a major focus of Osborne’s speech. Corporation tax rates and small company tax rates will remain the same, while future increases in business rates have been capped at 2%.
“Mr Speaker, there is one group of businesses that have found the recession especially hard – as it has coincided with a rising challenge from the internet that is only getting stronger. These are our local retailers – the shops, the pubs and the cafes that make up our high streets across Britain,” said Osborne.
Entrepreneurs and SMEs will be relieved to hear that business rate relief has been extended to small companies – a timely announcement by Osborne that coincides with Small Business Saturday this weekend.
“I want the government to do all it can to help them. To get the vacant shops that blight too many town centres to open again, I am introducing a new reoccupation relief that will halve the rates for new occupants…for the next two years every retail premise in England with a rateable value of up to £50,000 will get a discount on their business rates.”
Young parents were given some brief airtime in Osborne’s speech, and will be happy to know that tax-free childcare and meals will be introduced in schools. In particular, free school meals will be provided for all infant school pupils in Reception, Year One and Year Two. A new tax-free childcare scheme will also be rolled out, supporting up to 2.5 million working families with 20% of their childcare costs.
Scott Brown, Managing Director of Sable Accounting, identifies ‘responsible recovery’ as the key phrase in this year’s Autumn Statement.
“The Autumn Statement was fairly neutral, with the giveaways we see being countered by the clawbacks needed after the global recession,” said Brown.
The UK’s deficit still remains large – approximately 7% of its GDP by reliable estimates. Having said that, the 1.4% growth in GDP identified by the Chancellor in yesterday’s Statement is a confident revision from the 0.6% predicted in March earlier this year. The fact that the forecast for next year has been increased from 1.8% to 2.4% is a positive sign that economic conditions are improving, albeit slowly.
Time will tell how yesterday’s Statement affects entrepreneurs, contractors and SMEs in the UK, but for now, small businesses will be happy to know that relief is available.
1st Contact Accounting gives forward-thinking individuals the tools to steer their business affairs forward. If you’re interested in setting up a limited company with us, call 0808 141 2341 (free call within the UK) or email us. 1st Contact is a proud member of the Sable group.