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Wednesday, 22 April 2009

Reaction to Budget announcement

by Ilona Krohn, Principal Economic Advisor

A lot of the measures had already been announced, so there were no nasty surprises. The measures that have provided real support for businesses have been extended.

The main negative point was the increases in fuel duty, which will have an impact on businesses of various sectors.

We welcome the extension of the loss carry back for businesses and the increase of capital tax allowances for investments to 40%. We also welcome the announcement of the credit insurance scheme and the £750million investment for emerging technology. We were pleased to hear the measures for energy savings, and investment in skills, but were disappointed that there was no mention of apprenticeships.
However, with all these schemes we need to see the details to gauge their likely impact. Also, all measures need to be implemented immediately.

There is record public debt, which must be repaid at some point.

The Chancellor failed to paint a clear picture of the medium-term since he has not committed to any future tax rises and the economic forecasts seem quite optimistic. It is doubtful, that this budget will instill confidence in businesses or consumers.

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