PBR: “Businesses need that money by yesterday”

PBR: “Businesses need that money by yesterday”



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Late yesterday afternoon, Chancellor Darling finally unveiled his much anticipated pre-budget report, revealing a £20 billion package of tax cuts. 

As expected, VAT was cut by 2.5%. However, the move was universally branded “a drop in the ocean”, with many doubting if it would have any effect on consumer spending at all. Liberal Democrat, Vince Cable stated: “what I fail to see is how the economy gets a major stimulus from a 50p cut in a £25 restaurant bill.”

 

Meanwhile, small businesses looked set to benefit with over £7 billion worth of loans and tax cuts being given by the European Investment Bank. Struggling businesses will be allowed to spread their tax payments and offset £50,000 of this year’s losses against the profits of the last three years for tax purposes.

 

Empty commercial property valued under £15,000 will be exempt from tax and a planned 1% increase on corporation tax will also be deferred. KPMG’s small business analyst, Dawn Elliot, commenting on the Government’s proposed measures, said: “Access to cash will be welcomed. But businesses need that money by yesterday.

 

Many believe that the report did nothing to help the faltering housing market. Ross Bowen, managing director of Connells Survey and Valuation said that “the government has clumsily side stepped the most pressing issue where economic recovery is concerned.”

 

An expected expansion of the stamp duty exemption was not included in the report. Mr Bowen went on to say that the government had “underestimated the damage it would have as they left [the housing market] to grind to a halt, and now they are underestimating the importance of getting it moving again.  To make that mistake once was foolish, twice is unforgivable.”

 

£1.3 billion will be set aside to help Britain’s growing number of unemployed retrain and find new jobs, and families and pensioners were given slight increases in their benefits, in a move that was slammed as “skinflint” by Help the Aged.

 

The Chancellor has been criticised for making small temporary tax cuts that will spell national insurance increases for average earners and harsh income tax rises for high earners, from 2011. “The Chancellor has given with one hand and taken away with the other.” Said Marc Welby from accountants BDO Stoy Hayward.

 

The report has sparked heated reactions from everyone from the Conservatives to charity leaders. Although the details of the tax cuts are being hotly contested, the FTSE last night responded positively. Closing yesterday, it had soared by 9.84% - its biggest percentage gain in its history.

 

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