Budget 09: Small business - little help - keeping an eye on the banks
the word is that small business will not benefit overly from the Budget making this crisis moment for Alistair Darlin a missed opportunity.
Loss carry back – the measure which allows losses to be written off – has not be extended far enough and the doubling of capital allowance will be for people who will, mostly, not be doing any spending to claim allowances on. the effect therefore negligible
The upshot – if the government was willing to give back to business around £2bn over the next couple of years, as they said capital allowances would do – the effort should have been concentrated on loss carry back.
Of course, the rate of tax for small business has been held at 21% – better than paying 22%. But that only matters if you have a profit to pay tax on. How many businesses can claim they have a decent profit at the moment? Oh dear.
The Budget therefore is disappointing. There will be little for small business to rejoice and therefore and little reason for optimism. If there are green shoots of recovery around the chancellor did little to help them flourish.
The truth is, the economy is reliant on other things and mostly the banks getting their lending practices back to normal.
But here the chancellor merely said international accounting standards would be used to keep a closer eye on the behaviour of banks. ie more scrutiny (OK, that’s no bad thing) but precious litlle more than what we already know about to get them moving.
Of course, we knew there was going to be no great fiscal stimulus. Though that said, the government reckons the Budget will put £5bn into the economy this year. That’s less than half of one per cent of GDP. So perhaps Alistair Darling was hoping to be seen as the prudent chancellor not wanting to exacerbate too much the Budget deficit, which is going to run to about £175bn this year alone and with almost as much again the following year.
That’s reflected in the optimistic statement that the economy will start to recover late this tear. That’s a great wish, but will it really happen? Where I’m sitting there were gasps of disbelief at that idea. Overall 2009 will see GDP shrink by 3.5%. A punishing blow to the economy. It’s difficult to see how small and medium sized business can sustain that and yet be buoyed up by what little there was in this Budget.
Which means the boost to confidence that was really needed today is unlikely to happen. Which is a shame, because confidence could be everything at the moment.