Autumn Statement: Minimum wage hike could hurt Northern Ireland businesses
Northern Ireland's ability to attract investment based on a 12.5% business tax rate has been secured following the Autumn Statement, it has been claimed.
Chancellor Philip Hammond, in his first budget statement to the House of Commons since succeeding George Osborne, said he would continue the policy of UK-wide corporation tax cuts, but he gave no pledge to cut any further than a planned reduction to 17% by 2020.
The Chancellor also announced a £250m infrastructure fund for Northern Ireland - part of a new £23bn National Productivity Investment Fund - as well as a freeze in fuel duty and a the minimum wage increase.
But there were no drastic measures announced, with Mr Hammond insisting on taking a cautious approach.
Peter Legge, a tax partner at accountancy firm Grant Thornton, said: "Many had predicted the Chancellor's Autumn Statement to announce further reductions to corporation tax in the UK following the Brexit result. The fact that it did not can only be good news for Northern Ireland as we seek sufficient differentiation to secure additional investment."
Mr Hammond's speech also signalled a 4% rise in the minimum wage for over-25s to £7.50 an hour from April 2017.
But Martin Fleetwood, tax partner at PwC in Northern Ireland, warned that the move would be difficult for many employers to bear.
"The increase comes at the same time employers are facing a quadruple whammy of additional costs from the apprenticeship levy, holiday pay changes, pension auto-enrolment increases and the alignment of employer and employee national insurance costs," he said.
"The national living wage added 1% to the average pay bill for employees whenever it was introduced in April, and the latest increase will be felt by more employers as more employees are now at the national living wage level.
"The actual cost will vary across industries, with retailers, facilities management, care homes and the hospitality industry especially impacted."
The Chancellor also announced an additional £2bn in research and development funding, after which Ian Edwards, the tax director at EY in Northern Ireland, said it was "essential" for the province to capitalise on the support.
"If Northern Ireland is to become a powerhouse in science and technology, we must make more of the links between academia and the commercial world and utilise all available sourcing funds," he added.
The Autumn Statement had been billed as a programme to help people who are just about managing to make ends meet.
But Ulster Bank chief economist Richard Ramsey said there was no avoiding the fact that growth forecasts had been revised down and public sector borrowing revised up.
"The UK economy is expected to slow from 2.1% in 2016 to 1.4% in 2017 before a modest rebound to 1.7% in 2018," he added.
"Northern Ireland is expected to expand at a much weaker pace and will struggle to avoid a contraction next year."