The fallout from the Chancellor’s recent Budget announcement is still being calculated, especially in terms of support for business investment, according to the Engineers Employers’ Federation (EEF).
Overall, the headline figure is that business investment has dropped from 7% to 2.6% for 2016, according to Chris Richards, the EEF’s senior business environment policy advisor. However, that’s not to say that the it was a negative Budget for businesses. For example, more than 600,000 small firms were removed from paying business rates entirely, and corporation tax will be reduced to 17% by 2020. But could more have been done for manufacturers?
The Times recently reported that the Chancellor was forced into a last-minute U-turn over his plan to introduce tax relief from business rates for the UK’s struggling manufacturers and factories. This would include the complete removal of plant and machinery from business rates — a system recently adopted in France — which would have made UK manufacturers more competitive on the international stage.
The U-turn has been attributed to official forecasts overestimating the level of business investment for this parliament and the government’s expressed aim to have a £10 billion surplus by 2020.
What’s more, the EEF had previously estimated that around 42% of British manufacturers would have been likely to invest in more plant and machinery if such assets were removed from the business rates system.
Nevertheless, with the need for manufacturing to pick itself out of the current slump, improve efficiency and increase exports abroad, there are alternative options available, such as the rise in invoice and asset finance, which can provide finance for investment in new plant and machinery.
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