The engines are fired…With the brakes ready to be applied!
Following today’s budget speech by the Chancellor of the Exchequer, Neil Blankstone, Director at Blankstone Sington, picks out a few highlights: “The Chancellor’s announcements today are clearly aimed at encouraging economic growth with huge investments in business support, the now extended furlough scheme, business rates holidays, as well as the green economy and big infrastructure projects.
The biggest challenge for government remains how to control inflation if the economy does heat up.
First time buyers, and the banks, continue to be encouraged, which is positive for the housing market, but for most individuals, with a freeze on income tax thresholds, there will be little impact from today’s budget.
For now, having encouraged spend spend spend by consumers during the pandemic last year, with the furlough scheme, grants for the self-employed and the Eat Out to Help Out scheme, it is now the turn of business.
Companies investing heavily in new equipment, for example manufacturers, engineering companies and construction companies, and their associated supply chains, will benefit from the Super Deduction scheme. This allows companies to reduce their tax bills by 130% of the cost of new equipment over the next two years. The Chancellor gave the example of a construction company buying £10m of new equipment reducing their tax bill by £13m – clearly a huge boost to companies investing in new equipment.
Other winners include the Green economy, with more strength and demand likely to be seen in infrastructure funds, including the new Infrastructure bank which will only add to the competition in that market. Another point of interest on the green agenda is that carbon neutrality has been brought under the Bank of England’s remit – a significant addition to the bank’s scope and one to watch it the coming months.
With the focus now firmly on the low carbon economy, the need for Investment and Fund Managers to have a clear and identifiable policy on ESG will be paramount to their future success.
Equity is most likely to remain the best asset class for investors, with dividends likely to pick up and good growth prospects in the short term. The challenge for businesses in the longer term is how they make plans for the next rainy day and prepare for the tax rises to come.
And as Liverpool based firm, we couldn’t end without a mention of the region’s successful Freeport bid. Freeport status will promote regeneration, investment and job creation in much needed areas, another real boost for the city following the recent news about the new Everton FC stadium being approved by Liverpool City Council.
As always the devil will be in the detail!”