Osborne ‘backs small business’ but warns of EU uncertainty
The Chancellor opened his Budget with some stark warnings: that financial markets are “turbulent”, western productivity growth is “low” and the outlook for the global economy is “weak”.
“It makes for a dangerous cocktail of risks,” he warned, adding it was one that Britain is “well-prepared to handle, if we act now so we don’t pay later”.
He said his eighth Budget was one to “choose to put stability first and lead the world with long term solutions to long term problems” and to “make Britain fit for the future”.
The OBR confirmed GDP growth was 2.2% in 2015 and is predicted to be 2% this year; revised down from 2.4% in November’s Autumn Statement. It will be 2.2% in 2017 and then 2.1% for the following three years.
Mr Osborne’s statement comes three months before the UK votes on its EU membership. Osborne made it clear that the OBR forecast is predicated on Britain staying in the European Union.
“The OBR say, and I quote: ‘that a vote to leave would result in a period of potentially disruptive uncertainty while the precise details of the UK’s new relationship with the EU were negotiated’.”
With economic forecasts looking gloomy as the economy grows more slowly than expected and borrowing remaining high, the Chancellor had already signalled that there would be £3.5bn of extra spending cuts by 2020.
But he said that Britain’s economy is set to “grow faster than any other major advanced economy in the world”.
Osborne referred to his Budget being one that “puts the next generation first” several times over – with measures relating to education reform, a sugar tax and for those without pensions.
But he also called his Budget one that “backs small business”. Measures included:
-A reduction in the rate of corporation tax from 20% to 17% by 2020.
-A tax free allowance worth £1,000 a year for trading and property income, without the need to fill forms – aimed at those with micro businesses trading online and those renting their properties. Osborne called it a tax break for the digital age, from which 500,000 people will benefit.
-Increased rate relief for small businesses to £15,000 from £6,000 from April next year. This means 6,000 small businesses will pay no rates and 250,000 have their rates cuts from April 2017
-Commercial stamp duty was also reduced for small businesses with a zero threshold for commercial properties with a value of up to £150,000 and 2% on the next £150,000.
Meanwhile in measures for enterprise and the self-employed, Class 2 national Insurance contributions will be abolished from 2018 and capital gains tax will be cut from 28% to 20% and from 18% to 10% for basic tax payers.
He called it “a rocket boost on the back of enterprise and productive investment.”
The headline investment in the UK’s infrastructure had already been trailed with Mr Osborne committing £300m for transport projects, with than £230m earmarked for road improvements in the north of England, including creating four lanes on M62.
There was also government funding the start of work on the Crossrail 2 rail line and new High Speed 3 link across the north of England, as well as plans to develop the case for a tunnel between Manchester and Sheffield. Almost half of the transport money committed was announced in the Autumn Statement.
Osborne said this and other measures proved the Government was “making the Northern Powerhouse a reality and rebalancing our country.”
In response opposition leader Jeremey Corbyn said the Chancellor had “a recovery built on sand on a Budget built on failure” adding that it “failed to tackle inequality in this country.”