Ahead of the Spring Budget (Wednesday 15 March 2023), Chris Barlow, Partner at MHA, says that while the Government’s intention to introduce a new capital allowance regime is encouraging, it isn’t enough to offset current economic headwinds and the tax changes coming into force in April:
“UK manufacturing is still dealing with multiple headwinds, including labour shortages, supply chain challenges, increasing interest rates and rising energy prices. What the sector needs is the ability to plan for the long term. The absence of an Industrial Strategy is a very significant omission from the government.
“In the short-term cliff edges represented by the end of the super deduction and the increase in Corporation Tax rates (April) and then the end of the energy price support scheme (March 2024), are dampening investment.
“There is an opportunity at this budget to provide the leadership the sector needs. We appear to have passed the peak of inflation and there’s a windfall in the public finances which creates room for the Chancellor to incentivise companies to invest and plan more for the longer term.
“With no Industrial Strategy it is much harder for businesses to focus on long-term planning. Greater support by the government on energy prices, should costs remain high past March 2024, will also provide much needed relief if the energy crisis continues.
“The sector needs to avoid the full exposure to the proposed rise in Corporation Tax, see interest rates start to fall, have a cushion against high energy prices and know, with some certainty, that the government believes in the sector.”
https://mha-uk.co.uk/