A positive and balanced budget, hammering home the magnitude of support given to households and businesses throughout the pandemic. Extending existing support, including the furlough scheme, until restrictions on trading are removed in the summer is both necessary and sensible. For the most impacted industries, my sense is that the support announced is positive and more than expected.
Whilst there are challenges ahead with tax tightening that the Chancellor has been upfront about, today’s Budget sets out the first signs of a longer term plan for recovery. An investment-led recovery is how the Chancellor has framed it and there are some very interesting measures announced. The new 130% super-deduction for capital allowances on investment spend has the potential to significantly enhance capital expenditure and as an Asset Finance lender we are encouraged by this and stand ready to help support the financing of this spend.
It was also announced that CBILS and BBLS will be ending as planned, with final applications by the end of this month. Full details remain to be seen on the replacement Recovery Loan Scheme but the Government subsidy is expected to be limited to the provision of a guarantee and not a continuation of the Business Interruption Payment. This is another positive – the Government couldn’t possibly support commercial lending in perpetuity and this is a sensible bridge to an eventual transition away from such schemes whilst ensuring that the most impacted businesses should still have access to the liquidity they need. The actual impact will depend on the terms yet to be published and the hope is for a level playing field between lending products that encourages demand for longer-term working capital and investment facilities instead of just stimulating more shorter-term term loan debt.
Focusing the strengthening of the public finances on 2023 and beyond is another sign that the Government are not looking to disrupt the recovery. The rise in corporation tax to 25% is not something that businesses will welcome but it still remains competitive internationally and the small profits rate is a layer of protection for the SMEs that need it most. Maintaining income and inheritance tax thresholds, rather than increasing at least in line with inflation as planned, is a tax rise by stealth but a fair compromise.
