Not too much Spring Budget cheer for north-east businesses

Business chiefs are relieved the UK will not be going into recession this year.

But they are struggling to find much else to cheer them up in today’s Spring Budget.

Chancellor Jeremy Hunt highlighted an Office for Budget Responsibility (OBR) forecast of a 0.2% shrinkage of the economy  this year.

But the UK will avoid a technical recession, two consecutive quarters of contraction, he said.

With an ongoing leadership race for Holyrood’s top job, this Budget gives the incoming first minister an indication of how a new look Conservative leadership is approaching the economy.”

Vishal Chopra, KPMG UK.

The OBR downgraded its forecasts for future years shortly before Mr Hunt’s “Budget for growth” speech.

Britain’s economy is now expected to grow by 1.8% in 2024, 2.5% in 2025, 2.1% in 2026 and 1.9% in 2027.

Major skills challenge

Scottish Chambers of Commerce chief executive Liz Cameron said: “Today’s news from the OBR that the UK is expected to avoid a technical recession this year is welcome but at the same time, the cost of doing business continues to hold back firms from growing and investing.

“The chancellor’s statement today highlighted a major challenge facing the economy and that is the ever-tightening labour market and the growing demand for skills.

“Finding skilled workers is one of the top issues for businesses and the lack of available talent is preventing businesses from meeting demand and expanding.”

She added: “The chancellor’s confirmation of a £20 billion government support package for carbon capture and storage is welcome but there is a lack of clarity on whether the north-east of Scotland’s Acorn scheme will be backed.

“Providing detail now will be essential if we are to achieve the UK’s ambitions to net-zero and decarbonisation.

“The announcement that there will an investment zone for Scotland is welcome and has much potential.”

‘Nothing on business energy prices’

Mike Duncan, development manager for the Federation of Small Businesses (FSB) in the north-east, said: “Today’s budget doesn’t offer much practical help to smaller firms worrying about their costs and cashflow.

“Many in the north-east will be disappointed at a lack of headline measures to provide the immediate support they so badly need.

“Disappointingly, there was nothing on business energy prices.”

Mr Duncan added: “For months, the FSB and others have been calling for something better than the insignificant and expensive replacement plan that will come into force on April 1.

“This Budget was an ideal opportunity to make a noteworthy announcement, yet nothing was forthcoming.

“One bright spot though was on fuel duty.  Firms – especially those in more remote and rural areas of Aberdeenshire and Moray, or those who need to travel on business – will breathe a sigh of relief that it’s been frozen for another year following calls from FSB and others.”

Businesses want certainty and stability.”

Susie Walker, head of tax, Johnston Carmichael.

Fiscal measures confirmed by the chancellor include an increase in corporation tax (CT) from 19% to 25%, although Mr Hunt said only 10% of firms will pay the full 25% rate.

The small businesses investment allowance, which provides 100% tax relief on assets qualifying as plant and machinery, is increasing to £1m.

Susie Walker, head of tax at accountancy firm Johnston Carmichael, said: “There weren’t many huge surprises in today’s statement, but businesses want certainty and stability,

“News the UK main CT rate will increase to 25%, whilst balanced by generous tax reliefs for investment spend will be welcome.

“Also, the news that the UK will not now enter a technical recession this year will be well-received.

“The chancellor had a real focus on encouraging investment for growth.

“That will be very positive for businesses who will now be hoping that better times are ahead.”

Vishal Chopra, head of tax in Scotland at KPMG UK, said the Budget “reflected a calmer footing when it comes to public finances than last autumn’s”.

He added: “With an ongoing leadership race for Holyrood’s top job, this Budget gives the incoming first minister an indication of how a new look Conservative leadership is approaching the economy.”