The economic backdrop to Chancellor George Osborne’s fifth Budget statement was decidedly more positive than it was when he moved into Number 11 in 2010.
The economy grew by 1.8% in 2013, three times more than the Office for Budget Responsibility predicted at the Budget in March 2013. The OBR has now upgraded its growth forecast for 2014 to 2.7% and to 2.3% for 2015.
Employment grew by 105,000 in the quarter to January 2014, driven by a surge in self- employment, and the unemployment rate is down to 7.2%.
But it isn’t all good news. Inflation fell to 1.9% in January this year but average pay grew by 1.4% in the three months to January.
Also, the value of exported goods fell by 1.1% in the three months to January 2014, hardly the sign of an export-led recovery. In February, the Chancellor himself admitted to business leaders in Hong Kong that “Britain is not exporting enough.”
George Osborne also told his audience in Hong Kong that the UK’s economic recovery was not yet secure or balanced. He said that his 2014 Budget would be “… a budget where we must confront our problems and deal with some hard truths.”
He also echoed this sentiment in his Budget speech, saying that he had “… never shied away from telling the British people about the difficult decisions we face.”
The following is a summary of the announcements made by Chancellor George Osborne during the 2014 Budget on Wednesday 19 March 2014.
EXPORTS
Lending available to exporters has been doubled to £3 billion.
BUSINESS RATES
Discounts for businesses in enterprise zones have been extended for three years.
RESEARCH AND DEVELOPMENT
The research and development tax credit for small loss-making firms increases from 11% to 14.5%.
CAPITAL INVESTMENT
The Annual Investment Allowance AIA will be doubled to £500,000 from April 2014 and extended to December 2015.
ENERGY
The carbon price floor is frozen at £18 per ton of carbon dioxide from 2016 until 2020. The compensation for energy-intensive industries will be extended to 2019/20.
APPRENTICESHIPS
The apprenticeships grant for small employers has been extended.
HOUSING
Small house-building firms can access £0.5bn of finance.
AIR PASSENGER DUTY
Air passenger duty for all long haul flights will be in the same band B tax rate.
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Author Bio:
David Frederick
Principal Marcus Bishop Associates
