Hopes dashed for IT firms

Link: Budget 2003 special

Instead of an allowance for all companies, the chancellor continued an IT allowance available only to smaller companies.

The IT industry has suffered a two-year slump caused by under-investment in technology by larger corporations, and so was disappointed by the announcements.

‘A capital expenditure allowance would have been a boost to the whole technology sector. Companies are currently holding back on investment plans. An allowance could have brought decisions forward,’ said Kirk Locke-Scobie, UK and Ireland FD of technology company Avaya.

The managing director of accountancy software company Exchequer, Eduardo Loigorri, said he believed the allowance for smaller companies would do little to encourage expenditure in the IT industry.

He argued that these companies were less likely to be able to cope with red tape and said they did not have much money to spend. ‘Larger companies are likely to have the budget to make a difference,’ he said.

Far from offering a boost, Loigorri said the chancellor had made the investment climate worse, because his increase in national insurance would take effect this month. He argued this gave people a feeling of increased regulatory control, which usually forced them to cut their investment budgets even further.

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