The 2012/12/14 at 08:46
Stéphanie Salti, in London
Aimed at providing the gist of the government’s economic policy, the Autumn Statement presented by the British Chancellor of the Exchequer George Osborne on 5 December only half convinced the British Chambers of Commerce (BCC). The downward revision of growth forecasts for the coming years still appears too optimistic in the eyes of the BCC. “At -0.1 %, the new GDP growth forecast for 2012 is identical to our own, and predicts a sharp slowdown in the fourth quarter of 2012,” explains David Kern, Chief Economist at the BCC. “For 2013 and 2014, the Office for Budget Responsibility (independent body in charge of establishing economic forecasts, editorial note) is forecasting 1.2 % and 2.0 % respectively, which is more realistic than their earlier predictions. But we believe the new figures may still be slightly too ambitious, as we are expecting GDP growth of only 1.0 % in 2013 and 1.8 % in 2014.”
Given these morose economic forecasts, the Chancellor of the Exchequer has knocked back, by one year, his debt reduction objective, now envisaged for 2016-2017 while the budgetary consolidation policy has been extended by one year until 2018. In the opinion of the BCC Chief Economist, “the new fiscal forecasts are disappointing but not surprising, so it would be premature to assume that the UK will lose its AAA rating.” In the context of subdued growth, the Chancellor of the Exchequer has announced a new round of fiscally neutral measures whose reach seems inadequate according to BCC representatives. “Less than two weeks ago, the Prime Minister declared that Britain was in the midst of an ‘economic war’,” reminds John Longworth, Director General of the BCC. “Unfortunately, the measures set out in the government’s Autumn Statement fail to match the urgency of that declaration.”
Source: The Guardian
The BCC has nevertheless acknowledged that the government has taken a certain number of measures that are favourable to businesses: the body thus hailed the raising of the annual investment allowance to 250,000 pounds per year for the next two years. “We are convinced that these stronger incentives will encourage small- and mid-sized companies to dust off their investment plans and get moving,” asserted John Longworth. The body in charge of Chambers of Commerce also approved of the announcement of the introduction of new funding of 70 million euros to be granted to businesses wishing to export to emerging countries. Still in favour of businesses, company tax is to be reduced by one point to 21 % from April 2014 onwards, making Great Britain the most competitive country in terms of tax rates amongst Western economies.
The setting aside of 77 million pounds to the British Revenue Office to fight tax evasion has also been applauded by the BCC that has nevertheless warned against the temptation for the political and media class to “chase away major companies that generate jobs and investment”. The influx of an extra 5 billion pounds towards British infrastructures has also been well received by the body that however invites the government to go further. “The political risks around infrastructure investment must be swept away – and fast- so that private finance can step in and shoulder some of the cost of our national infrastructure upgrade,” emphasised John Longworth.
The British Chancellor of the Exchequer has also restated the coming introduction of a public investment bank endowed with one billion pounds in order to boost credit for businesses. While the announcement on help with credit has been particularly welcomed by the BCC, the body nevertheless regrets the lack of details on the schedule for the creation of this entity.