Belfast Telegraph

Friday 19 September 2014

This Budget is challenging but full of incentives

Business managers in Northern Ireland should be supportive of the Budget proposed by George Osborne.

The biggest benefit for the economy and businesses is the creation of greater certainty in the monetary and fiscal policies of the Government.

This should bring the further benefit of greater stability in price levels, the avoidance of inflationary pressure, a continuation of low and stable interest rates and, for some businesses, the prospect of a stable and slightly stronger sterling exchange rate.

There will be a general welcome for the proposals to reduce UK corporation tax from 28% to 24%, although the timing over four years is far from urgent. Micro and small firms will also welcome the offer of a 20% rate for them.

Although the impact may be small, many a new micro-business will be pleased to take advantage effective of the exemption from employers national insurance payments of up to £5,000 on each of the first 10 employees hired.

There will be a careful scrutiny of the rules to administer the scheme to avoid distortions. What constitutes a new business and when is a transfer with no real change of control disallowed?

The Budget shows that, despite the wider economies and cuts, the Chancellor is seeking to incentivise improved performance in the private sector in the regions away from the south east of England.

For Northern Ireland, the key part of the Budget statement was recognition that the Government will produce a special study on how to rebalance the Northern Ireland economy.

Critically, and with a hope that the arrangements will motivate Executive Ministers, the study is to be in consultation with the Executive.

The case for devolution of power to levy corporation tax still seeks credibility.

The Treasury may use this study as an opportunity to revisit the ideas originally tabled in the Varney report, as well as simply looking for lower corporation tax.

This Budget is tough. The Northern Ireland economy faces continuing difficulties.

There is no magic cure. Strengthening the local economy is still a challenge to local decision makers.

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