CITY stalwarts displayed cautious approval in the wake of the emergency Budget yesterday, as the chancellor’s plans settled some nerves over UK spending.
CBI director-general Richard Lambert said the five-year route map for corporation tax “provides much-needed consistency and certainty”, which combined with proposals on foreign profits and intellectual property could reverse the tide on companies moving abroad.
Peter Isherwood at Evolution Securities said the Budget “came with a lot of missing details but good political management” and appeared positive against expectations.
Not everyone in the Square Mile was convinced by the Budget. The cuts laid out “would have been inflicted under Labour”, according to Roger Bootle at Deloitte, but the coalition “still hides some of the pain that will be felt because it has not yet laid out the detailed plans for public spending”.
Claire Higgins at Knight Frank warned that the VAT hike could pose problems, as the increase under the last government “clearly demonstrated the potential inflationary impact of VAT rises.”
Osborne himself passed the first test as chancellor with several glowing reviews. Miles Templeman from the Institute of Directors said he “never expected the chancellor to tick all our wish list but he did tick many boxes.” Lambert described him as sensible, and Tim Linacre of Panmure Gordon went as far as saying the chancellor is “entirely right”.
CBI director general
“The chancellor has achieved his twin objectives of setting out a credible plan for the public finances and producing a convincing growth strategy for the longer-term. Osborne is close to achieving his 80:20 ratio of spending cuts to tax increases, which is so important to sustaining long-term growth. He has struck a sensible balance on Capital Gains Tax, limiting the impact of the increase on entrepreneurial activity and long-term savers.”
Panmure Gordon chief executive
“The chancellor is entirely right: Britain needs a sign over the door saying ‘open for business’. To achieve this, two conditions are required: fiscal competence and an environment in which business can thrive. In this Budget, Osborne has gone a long way toward achieving the first and made some interesting steps toward achieving the second. Given the fiscal mess they inherited, the coalition deserves credit for this Budget.”
Institute of Directors director general
“The economy needed faster and deeper deficit reduction and that’s exactly what the chancellor has delivered. Equally important to the scale of deficit reduction is the way it is done. Here again the chancellor has chosen the right route, by concentrating overwhelmingly on closing the fiscal gap by lower spending instead of higher taxation. Today’s Budget is an important step on the road to fiscal common sense.”
Jones Lang LaSalle head of research
“The emergency Budget announcement will have done little to calm the nerves of housing developers who were looking for the government to honour spending commitments on new housing schemes. The proposed reduction in government department budgets by 25 per cent over four years will not help those waiting on housing lists or those unable to buy their own homes.”
PwC UK chairman
“The deficit had to be confronted and reducing spending in a targeted way and increasing taxes was the only response to this immense challenge. I welcome the chancellor's commitment to providing greater certainty on UK corporation tax, to sustaining capital spending and protecting investment projects which will have the greatest economic impact and to making Britain open for business.”
Forum of Private Business chief executive
“The one per cent cut in small companies’ tax, together with the new £5m threshold for entrepreneurs’ relief on capital gains tax (CGT), are positive measures. What we will be calling for now is a guarantee of genuine private sector input into the white paper on local economic growth Osborne mentioned. We want to see it focusing on smaller business-led innovation and jobs in regions that are likely to be affected by public sector job cuts.”
Lord Mayor of the City of London
“This Budget represents an important step toward returning the public finances to a healthier state. The City welcomes the chancellor's commitment to support the growth of private enterprise and the downward trend in corporation tax will help to achieve this outcome. In such challenging circumstances, we must all pull together in the same direction and the City will continue to make a considerable contribution.”
British Bankers Association
“The banking industry fully understands the part it must play in helping the UK’s economic recovery. The banking industry will work to meet its obligations in helping bring the economy back to strength. Bank levies need to be co-ordinated internationally: They must not prevent the industry in the UK from being able to compete. It is essential that the international banks do not find themselves taxed multiple times for the same thing.”
Deloitte economic advisor
“This was a Budget with two faces. The total discretionary tightening will build up to eight per cent of GDP per annum by 2015-16, larger than Canada’s in the 1990s, but smaller than Sweden’s and Finland’s. But the tightening announced over and above that embodied in the Labour government’s plans, although somewhat larger than many outside commentators expected, was in fact fairly modest.”