Rishi Sunak’s ‘holding’ budget: furlough extension to September; hike in corporation tax; business rates holiday extended - but no long term recovery plan outlined
The Chancellor of the Exchequer has announced what is effectively a ‘holding’ budget with more help for businesses and workers but little in the way to get the economy back to normal this summer.
Ian Carrotte of ICSM said he was surprised by the decision to extend the furlough scheme into the autumn. He said: “We need Britain to get back to work this spring – not next October. The Government have put the country on hold rather than showing a bullish attitude and encouraging city and town centres to reopen now. My concern is the difficult decisions are being put off to the future as the Chancellor is borrowing incredible amounts and it will have to be paid for one day. Hiking corporation tax will not stimulate the economy.”
Pros. ICSM gives the thumbs up:
£5bn fund for Restart Grants for businesses. Retailers will get up to £6,000 per site from April. Hospitality and leisure open later and will be able to claim up to £18,000.
New recovery loan scheme for businesses of £25,000 to £10million, 80 per cent guaranteed by the Government.
Business rate holiday in place until June and discounted for the remaining nine months of 2021-22 financial year.
5% VAT rate for hospitality extended to September, then at 12.5%until April 2022 before returning to 20% regular rate.
£5bn fund for Restart Grants for businesses. Retailers will get up to £6,000 per site from April. Hospitality and leisure open later and will be able to claim up to £18,000.
Cons. ICSM gives the thumbs down to:
Furlough scheme extended to the end of September under current 80 per cent of salary rate. Instead the scheme needs to be phased out quickly as it is open to abuse and gives a false sense of security to many firms that are essentially insolvent.
The UK has borrowed £355billion – 17% of GDP - the highest since the Second World War. The question is when and how and who will repay all this borrowing?
Corporation Tax increased to 25 per cent in 2023. So much for not increasing tax. This has gone down like a lead balloon – and it’s a Conservative Government announcing it.
Summing up
Ian Carrotte said he had hoped the Government’s obsession with Covid-19 would have given way to a desire to reboot the economy and return the country to normal.
“More than a million freelancers and company directors have been left to fend for themselves,” he said, “while key workers from van drivers, warehouse workers and those in the health and care sector have continued to work as normal. More than 4m workers are on furlough. It doesn’t seem necessary now things are improving and to extend the system to September doesn’t do the economy any favours.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk