In his Autumn Statement today, Philip Hammond had good news for SMEs, announcing that £400m would flow into venture capital funds through the British Business Bank to unlock £1bn in finance for growing firms. The Chancellor, who announced an increase in the National Living Wage, is also giving small businesses in rural areas a tax break worth up to £2,900 per year by increasing the rural rate relief.
Hammond said the Brexit vote underlined the urgent need to tackle the UK economy’s long-term weaknesses as the Office for Budget Responsibility cut growth forecasts for next year.
The Chancellor, delivering his first Autumn Statement, said the economy had so far “confounded commentators” with its “strength and resilience” but he revealed the OBR had downgraded growth forecasts for next year from 2.2% to 1.4% as a result of the uncertainty caused by the Brexit vote and higher inflation due to the fall in sterling.
Five of the main announcements
- Fuel duty rise cancelled, saving car drivers £130 and van drivers £350 a year
- A total of £23bn to be spent on innovation and infrastructure over five years
- No plans for further welfare savings in this Parliament
- Insurance premium tax to rise from 10% to 12% next June
- Promise to abolish Autumn Statement, with a Budget in the autumn from next year, along with a “Spring Statement” from 2018
So, from next year, the Autumn Statement will become the main Budget. The spring Budget in a few months will be the final spring Budget. Starting in autumn 2017, Britain will have an autumn Budget, announcing tax changes well in advance of the start of the tax year. From 2018 there will be a Spring Statement, responding to the forecast from the OBR, but no major fiscal event.
Mike Cherry, chairman of the Federation of Small Businesses, said: “We welcome government responding to our calls to increase investment in local roads and digital connectivity to help rebalance the UK economy. We also back the £2 billion per year boost for research, development and innovation, plans to improve management skills, the £400m to improve small business finance through the British Business Bank, and the doubling of export finance. The latter is vital as we need to reach new markets in the wake of the Brexit decision.”