Referencing the picture across Europe, in his statement today, Chancellor George Osborne said: “We will do whatever it takes to protect Britain from this debt storm…”
Restrictions on public sector pay rises, outlines on future public spending and a commitment to meet the 0.7% of GDP aid target were all included in his 45-minute speech.
In terms of support for businesses, the Chancellor said that keeping interest rates low was the most powerful tool for stimulating demand.
His plans include a major programme of credit easing, a national loan guarantee scheme to be launched to fund loans to firms with a turnover of less than £50m and 50% income tax relief from April 2012 for investment in small start-up businesses of up to £100,000.
A boost to struggling small businesses in the form of business rates relief was also confirmed.
The existing business rate relief holiday will be extended by six months, taking it to April 2013 – a move that will be welcomed by 330,000 small businesses who will not pay anything and 500,000 who will continue to pay less.
The holiday offers 100% relief on business rates up to £6,000, with progressively smaller rebates on amounts up to a maximum of £12,000.
While these measures are a step in the right direction, there is certainly more that could be done, and in particular the continued imposition of 100% rates liability on long term unoccupied commercial properties.
This tax was originally introduced to encourage landlords to reduce rents but has largely failed in a market where oversupply is rife and many landlords are simply demolishing older stock. The potential rates liability is acting as a further barrier to speculative development.
Richard Farr
Partner, Rating and Regeneration
(0191) 269 0115
richard.farr@sw.co.uk
