As the Chancellor Rishi Sunak looks set to announce the budget tomorrow The Manufacturer takes a look at some of things we could expect to see to help the UK’s makers.
There is always an air of anticipation around the announcement of the budget. But this year the Chancellor has the backdrop of post-Brexit Britain and the recovery from the Coronavirus pandemic to contest with when setting out his plans.
Over the course of the pandemic, the government has borrowed a record £270bn and now has to set out how it will go about paying this sum back.
The obvious way of doing so is raising taxes, with a likely Increase corporation tax from its current level of 19% to 23%. This would still be below the average of other G7 nations and maintain the UK’s competitive edge on inward investment. This rise would be staggered over the course of this parliament and could bring in a reported £12bn in the exchequer.
The question on many manufacturers lips revolves around the furlough scheme. With unemployment at a five-year high and four million workers currently receiving furlough, an extension of this scheme would provide welcome relief for employers and employees alike.
The current furlough scheme is due to finish at the end of March, but with the announcement of lockdown ending in June it has been widely reported that the scheme will be extended to coincide with this.
Getting trade moving post Brexit is also a key issue the Chancellor has to contend with, and it is also expected that he will use his budget to announce a serries of freeport sites across the UK.
Freeports are zones where taxes, duties and regulations are liberalised to encourage trade and development. Some believe they would be a positive incentive to further the UK’s green agenda. Companies looking to invest in freeports have an eye on the growing green sectors of the economy, which include offshore power generation and new technologies aiming to reduce the use of fossil fuels in industrial processes.
The Annual Investment Allowance (AIA) has been set at £1m since 2018 and was extend in the last budget to run through until January 1st 2022. This has benefited businesses investing in capital goods. However, more could be done by the government to highlight R&D tax credits that can support investment in digital technologies.