A down payment on growth

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In our experience Budget statements always bring the good, the bad and the ugly. In our blog last week we outlined the six areas where we really needed to see some tangible progress from the coalition if our economy is to generate better balanced, sustainable growth.

This Budget had to be about more than government getting out of the way. Government needed to hard look at the UK's business environment and, importantly, how it compares with other economies also seeking to boost growth throught investment and exporting. And then take steps to ensure that companies with ambitions to invest and innovate start to see that it makes commercial sense to do that here in the UK.

What we got were some measureable steps in that direction.

Specifically we got a signal that the government gets how manufacturers invest with an extension in the Short-Life asset regime - something that EEF has been campaigning hard on. Extensions of the R&D tax credit for SMEs this year and next are welcome but the potential for further change in the coming consultation in May will be eagerly watched. We'll be looking for the definition to be broadened to include more development activity and for the rises to apply to all firms.

A bigger cut in the headline rate of corporation tax isn't to be knocked, nor is the commitment to more apprenticeship funding. The were some strong words on deregulation, particularly the Prime Minister's intention to take the battle to Brussels - we'll have to wait to see if that can deliver.

Further, the government's Plan for Growth provides a parliament-long commitment to improving the UK's competitiveness through the tax system, the environment faced by start-up businesses and those looking to grow, boosting exports and investment, and lifting the education and flexibility of the workforce.

However, the bad and the ugly came on the environmental tax measures. We saw further evidence of the coalition's continued willingness to forge a path ahead of major competitors in its aggressive response to climate change. The introduction of the carbon price floor from 2013, rising to £30/t in 2020 is well above forecasts of where the price of carbon will go through the EU-ETS. EEF continues to caution against advancing climate change policy at the expense of UK industry's competitiveness.

But the question we said we would pose when the Chancellor sat down was 'is the UK now a better place for manufacturers to invest and grow their businesses?'

The answer is a modest yes with further positive signs on the horizon. But the Budget cannot be an excuse for any let-up from the coalition in dismantling the barriers to growth. We will hold the government to account on its Plan for Growth and expect progress to be consistent and considerable in future years.

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This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

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