ACCA experts offer their initial reaction to key announcements in today's budget.
Claire Bennison, head of ACCA UK, commented: ‘We are pleased the Chancellor has continued support for businesses, but this seems like a fragmented Budget that fails to provide a longer-term roadmap to recovery for them. Many owners will still lack any clarity about their route back to stability and the government’s agenda beyond the next few months.’
Tax measures: corporation tax
Glenn Collins, head of technical advisory and policy at ACCA UK, said: ‘Corporation tax increases in 2023 may help to raise extra money in the future, but in the long term only greater economic growth is going to pay off Covid debts.
‘Some of the Chancellor’s measures will help with growth, but all of them come with administrative costs for the business owners trying to juggle tax alongside every other aspect of their operations.
‘The rollercoaster of rates and changes in corporation tax in recent years have not helped businesses plan. Each of the measures announced is potentially helpful in isolation, but in the real world, they are going to interact with each other and with everything else that business owners have going on.
‘Business rates relief for hospitality is welcome, but without increased demand from customers it looks set to taper off all too quickly. Likewise, the proliferation of VAT rates across time and products in the sector will be a mixed blessing for smaller concerns who feel the deadweight cost of administrative changes more than their larger competitors.’
On company directors
Glenn Collins, head of technical advisory and policy at ACCA UK, commented: ‘The Chancellor is looking to rebuild public finances by asking businesses the government has supported to pay extra, rebuild communities and take on risk, but that will also affect those freelancers and directors that have been ignored and not received assistance. Why are they ignored and once again left out of the support packages?’
The economy and public finances
Michael Taylor, ACCA’s chief economist said: ‘We welcome the improved economic outlook reflected in the updated OBR forecasts. Based on a strong second half of the year as consumer spending rebounds, the OBR now expects the level of economic activity to return to its pre-pandemic level by the middle of next year. GDP growth is forecast to be 4% this year and 7.3% in 2022 which is in line with consensus forecasts. But government borrowing will remain very high at £234bn (10.3% of GDP) for 2021/22. The public sector debt to GDP ratio rises to a peak of 109.7% by 2023/24, a remarkable 25% of GDP higher than in 2019/20 - a measure of the huge fiscal cost of COVID-19.’
Public Sector: Gender Responsive Budget and International Women’s Day
Rachel Bleetman, subject matter expert for public sector says: ‘While it is right to see more funding for domestic violence as part of this budget, more attention should be paid to account for women's economic insecurity and the disproportionate shouldering of unpaid work. With International Women’s Day next Monday, ACCA is calling for a more inclusive approach to the economic recovery by accounting for the gender equality gap exacerbated by the pandemic.’
Public Sector: Government Guarantees
Alex Metcalfe, head of ACCA public sector explains: ‘The government has announced significant new guarantees for recovery loans and first-time homebuyer mortgages. It is critical that the government fully considers the growing fiscal risks from providing these financial promises and work with the OBR to understand their impact on the public sector balance sheet and the sustainability of the UK’s public finances, more generally.
Claire Bennison, head of ACCA UK, said: ‘We welcome the boost to the money offered to employers to take on an apprentice and the flexibility to allow apprentices the opportunity to work for different employers. However, we are not convinced that a one-off payment of £3,000 is enough to incentivise employers to create and sustain new jobs at this time when the number of new apprentices is falling. Small businesses require longer term support, such as subsidised wages for new starters.’
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