All eyes will be on 11 Downing St tomorrow as the chancellor, George Osborne, leaves to deliver a budget likely to be more unpopular than England’s national football team.
So what can the nation expect from Osborne?
According to HM Treasury, the budget will set out a plan to tackle the deficit, restore confidence in the economy and support the recovery.
Osborne’s budget speech is likely to ‘mark the start of the long-term task of moving from an economy built on debt to one based on saving, investment and exports where growth is spread more widely.’
To achieve this, there are likely to be welfare cuts, a review of public-sector pensions, and tax increases among other measures.
The Treasury is keen to stress that the government will inject ‘new life into the private sector allowing enterprise to drive the recovery’ and it will achieve this in part by reforming corporation tax by simplifying reliefs and allowances and raising the thresholds for employer National Insurance contributions.
Industry bodies including the SMMT and ICE have already delivered their pre-budget recommendations to the chancellor.
The SMMT argue that to support business growth the government should immediately address access to affordable credit. This would encourage renewed investment and enhance business and private demand. The automotive organization says there should also be a re-think regarding raising VAT as this could decrease the level of private car demand.
The SMMT add that businesses need confidence to plan the research and development of new technologies, so require consistency in the provision of associated tax credits.
Similarly, government’s aim to achieve a lower rate of corporation tax is welcomed, but ‘industry has reservations over the changes to relief allowances and credits that may be required to achieve the lower tax rates.’
The Institution of Civil Engineers (ICE) is urging the chancellor to use tomorrow’s budget as an opportunity to firm up its commitment to establishing a Green Investment Bank.
ICE is also calling for reassurances that it will be ambitious enough to attract the levels of investment needed in the UK’s infrastructure networks.
This comes on the back of last week’s ‘The State of the National Infrastructure 2010’ report that claimed Britain’s energy infrastructure is on the brink of collapse and will not be sustainable past 2015 unless billions of pounds are invested.
Tax specialists Capitus are warning of possible changes to R&D tax relief which could mean that many businesses which could previously claim will no longer be able to do so.
In its manifesto, ‘The Coalition: Our Programme for Government’, plans were announced to refocus R&D tax credits on larger high-tech or science-based companies and small firms and start-ups.
The CBI is looking ahead too, with a report released today that highlights the importance of the Britain’s flexible labour market and the role it can play in minimising job losses during the recession.
Proposals from the Making Britain the Place to Work report include embracing more flexible working, blocking regulations that will cost jobs and changing industrial relations legislation.
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