The Budget 07/08: The Economy and Big Business.
Gordon Brown, if we brush aside issues of extensive borrowing just for the moment, has maintained a historically stable and affluent economy. Although he has had a huge amount of luck along the way, such as the finances inherited from his predecessor, his achievement has been spectacular, with the longest period of sustained economic growth the UK has ever seen.
Whilst the Tories are continuing to call this Budget one of ’smoke and mirrors’ whereby he is said merely to have shuffled things around, the budget is neutral with taxes restructured in an attempt to simplify the system and better endow British citizens and businesses.
All of this comes with a change in corporation tax that was grasped with such open arms as to push the FTSE 100 up 60 points at its mere mention in Brown’s speech on Wednesday.
Though a tax neutral budget will prove beneficial in keeping the economy as stable as it has been in the past ten years, Brown has been borrowing extensively and as such it would seem wise to build up a ‚’buffer’ against any external economic downturn. And wise Brown is.
Corporation tax plans to be cut from 30 per cent to 28 per cent. This seemingly small change will vastly increase the attractiveness for big businesses to operate from our shores, bolstered yet further by our continued membership within the EU and the internal market. A saving for businesses between 2009/10 is said by the Treasury to reach around £2bn.
However, beneath all of this there are a few who denounce additional adjustments to capital allowances whereby, whilst big business will benefit on a whole from cuts in corporation tax, those in capital-intensive industries could stand to lose out (such as retail and leisure).
So this end, negative outcomes may arise for smaller enterprises that operate increasingly in such tertiary industries. It would seem that Brown is putting economic stability over enterprise, big business over fledgling entrepreneurs.
Some, as the TUC have rightly stated, may not easily comprehend why:
“When businesses are enjoying record profits, the chancellor found money to cut their tax payments, while telling public sector workers they must get by on below inflation pay increases.”
Whilst I would certainly have liked to see more concessions and support for small enterprise, which Brown is said to be a promoter of, by cutting tax on big business the potential boost may reap far greater revenues than with the 30 per cent level currently. If so, not only will our nation’s economy become more secure, but also more money shall be made available to invest into the wages of public sector employees.
Coming soon: My article on the environment and the effects the Budget stands to make upon it.
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very interesting. i’m adding in RSS Reader