We decided to take a moment to think about small-medium-enterprises specifically and what this might mean for them.
While the proposals inside the iconic red briefcase were expected, the budget has still caused quite a stir, with many adamant it doesn’t go far enough in supporting mental health or enacting childcare reforms fast enough.
However, we did see a focus on supporting small-to-medium enterprises (SMEs) and foreign investment, as part of the country's ambition to become a tech powerhouse. So what is in the Spring Budget that’s useful for SMEs to know?
Stimulating growth a top priority
The government is clearly being strategic when it comes to UK businesses. The Office for Budget Responsibility (OBR) predicts a fall in inflation from 10.7 per cent in the final quarter of 2022 to 2.9 per cent by the end of 2023. This news is a welcome relief for many businesses which have been significantly negatively impacted by the pressures of inflation (and still are).
Despite the corporation tax rise this April from 19% to 25%, the UK will still have the lowest headline rate in the G7. This makes the UK an attractive destination for foreign investors and should help to drive further investment into the country.
The budget also includes a £63 million investment to encourage retirees over 50 back to work through ‘returnerships’ and skills boot camps. This investment will help to boost employment and support older people in the workforce, who are able to bring advanced skills back to the economy to ensure they’re transferred properly to the younger workforce of today.
Here comes a boost for research & development
Now for the fun part – Research & Development (R&D). This is a big part of what makes SMEs tick. After all growth comes through investment, trying new methods, and pushing boundaries. The Spring Budget means that businesses prepared to invest in R&D will be supported through a new tax credit worth £27 for every £100 they spend. Businesses spending 40% or more of their total expenditure on R&D will qualify for this tax credit.
The Annual Investment Allowance has increased to £1 million, which means 99% of all businesses can deduct the full value of their investment from that year's taxable profits. This will be a great help for SMEs, as they’ll be able to invest in their businesses more effectively and efficiently.
Then of course comes the major buzzword of 2023 – Artificial Intelligence (AI). AI is absolutely flying in 2023, and it appears it’ll continue to do so, with £900 million announced to support building an ‘exascale supercomputer’ to work on research and run projects.
But the truly exciting news - The Manchester Prize. The prize (named after Manchester University’s invention of the first stored computer in 1948) promises £1 million every year to the most ground-breaking AI innovation over the next 10 years, to encourage AI research in the UK.
In short, innovation and growth front and centre of the government’s plans. And SMEs across the country will need to keep an eye on how they can maximise the government’s incentives while navigating a tricky 2023.
Business first approach
The Spring Budget has caused controversy. While it does encourage growth for the UK economy in an effort to halve inflation, it perhaps doesn’t go far enough in supporting the very thing that makes the economy tick; people.
As a business, we at GRENKE regularly look inward to understand how we can support our staff as they navigate the very real economic headwinds of 2023. If we’re to rebuild a successful economy, it will also need to be founded on supporting people’s mental wellbeing, and allowing parents to participate in the workforce without the extremely high costs of childcare looming over them for another two years at least.
Got thoughts of your own? We’d love to hear them. Whether you want to explore the transformative potential of asset financing, or simply discuss the Spring Budget, we’re just a phone call away.