The Chancellor delivered his Spring Statement in the context of waning business confidence and the war in Ukraine. Firms were looking for support in the face of rising energy and commodity prices and for him set out how he would boost the UK’s economic resilience in the longer term.
For firms, the plan to incentivise business investment from next year is good news but there was little to help tackle the current costs and challenges facing firms.
What does it all mean for business?
Going into the Spring Statement there was a danger that headwinds were trumping tailwinds, this has been reflected in the OBR downgrading their forecasts for growth this year from 6% to 3.8%. The Chancellor provided support to households in the form of an increase in the National Insurance threshold and a promise to cut Income Tax in 2024. There was some additional support for smaller firms, with an increase in the employment allowance and some relief in the form of a fuel duty cut and cut to VAT on energy saving goods. But this won’t have gone far enough for many firms grappling with increasing energy costs. Businesses needed to see further support to help them through this period.
Business will be pleased to see the Chancellor setting out a plan for the longer term with a vision to stimulate business investment and boost the UK’s productivity through the next fiscal event in the Autumn. He has committed to supporting capital, ideas, and people in line with the CBI’s Go for Growth campaign. Plans to announce tax cuts on business investment, further reform to R&D tax reliefs and to revisit the effectiveness of the apprenticeship levy will be welcome news for many firms looking to invest in the UK. And the CBI will work with government over the coming months on these reforms.