A budget to boost confidence and grow the economy?
A budget to boost confidence and grow the economy?
Wednesday 6 March 2024 marks Chancellor Jeremy Hunts second budget. If polls and media speculation are right this could be his last if a new Government is installed later this year. It is therefore no surprise that there have been reports that he is looking for opportunities to announce further tax cuts to win over the general public.
Pulse Cashflow believe the Spring budget must be about restoring confidence in the business sector and encouraging growth.
However, he has been insistent that he will not fund tax cuts by increasing borrowing which means spending cuts or increasing taxes elsewhere.
It is rumoured that workers will, if speculation is right, benefit from tax cuts in the form of another National Insurance cut. Rates dropped from 12% to 10% in January 2024, as promised in his Autumn Statement. Speculation suggests he may reduce them further (by as much as 2%) but is this the right move? The positive point of this move would be that it will give consumers up to £450 extra per year of spending money but should he be diverting his attention elsewhere? But where will he get the funds from to enable this – possibly from scrapping the “non-dom” tax status (although many Conservatives see this as a revenue inducing tax break), introducing levies on vapes and scrapping tax breaks for second homeowners who rent to tourists.
Pulse Cashflow want to see the Chancellor supporting businesses. With forecasts suggesting the recession was short lived and the UK is already out of recession, the fact remains that growth is weak and he must do something to boost business confidence and encourage stronger levels of growth.
Will VAT figure in his plans? We certainly believe that raising the VAT threshold will support smaller businesses to go for growth rather than stalling to avoid hitting the threshold. Incentivising growth and job creation must be high on his agenda. Bringing back VAT free shopping for tourists will encourage tourism whilst supporting UK business growth.
We also call for him to extend the 5p cut in fuel duty. This “temporary” fuel duty cut was introduced in 2022 and is due to expire this month. Most businesses rely on transporting their goods to their customers and have in recent years incurred significant increases in fuel costs. By extending this 5p cut for another 12 months will be most welcomed not only by those incurring the additional cost but by consumers who inevitably would end up paying more for goods.
We applaud his announcement this week regarding a £360 million investment in advanced manufacturing projects across the life sciences, automotive and aerospace sectors alongside the Treasury’s £800 million package to boost productivity in the public sector. All of which should deliver opportunities for the business sector.
