Business measures at the heart of Chancellor George Osborne’s latest budget delivery included help for exporters and tax-breaks designed to put wind in the sails of manufacturers.
“We need our businesses to export more, build more, invest more and manufacture more,” Osborne said. But was it enough for SMEs? And will they have time to reap the benefits before the next general election?
More exports to growth markets
Three years ago, George Osborne declared a “march of the makers” calling upon manufacturers, many of whom are SMEs, to start exporting more to high growth markets like China, India and Brazil.
He’s paved the way for this to happen in his latest budget delivery by doubling the amount provided for export finance to £3 billion. He’s also slashed the interest charged on this support by a third.
While this comes as good news for SMEs, a big challenge still lays ahead – specifically with access to finance and funding as banks still show a reluctance to lend to these types of businesses.
More cash back
It is welcome news that the rate for SMEs research and development tax credit will rise to 14.5% from 11%. This means a greater amount of cash back in relation to qualifying research and development outlay – a big help for SMEs as many will often post losses during their early years.
The chancellor has also doubled the annual investment allowance from £250,000 to £500,000 and extended it until the end of 2015. On the surface, this would appear to be a positive move for SMEs but while it allows for businesses to plan infrastructure projects with confidence, for the vast majority, the temporary doubling could create confusion.
There’s an uncertainty as to what will happen when the temporary enhanced limited ends in 2015. Furthermore it will only be relevant to SMEs with the surplus cash available to make such an investment; bringing us back to the difficulty surrounding borrowing money.
Osborne has also promised to cut business energy costs by £7 billion; something which will be welcomed in particular by SMEs operating in the food and drink sector – Britain’s largest manufacturing industry.
It aims to reward those who invest in energy efficient technologies, but will the reward be enough to keep Britain’s economic recovery on track? And will it keep the Conservatives in power by the end of 2015?