/ News / Budget 2021 - Lancashire Enterprise Partnership responds

The Budget seems to be doing just enough to keep the UK and Lancashire economies ticking over, but the Chancellor is not giving himself or Lancashire firms enough room to manoeuvre if the lifting of lockdown is delayed or the recovery that follows is more fragile than expected. The Government's bold, ambitious plans for the post-Covid economy are welcome, but are based on very optimistic assumptions about how quickly businesses and growth can bounce back.

Responding to the Chancellor’s Budget statement, LEP Chair David Taylor CBE DL said: “Extending the vital lifelines that employees and employers are relying on to survive lockdown – the furlough scheme, the business rates holiday, the recovery loan scheme – is, or course, welcome. However, it delays a potential cliff-edge for redundancies and business closures rather than avoiding a cliff-edge entirely. If the lifting of lockdown is delayed, or the anticipated recovery is more fragile than expected, the Chancellor will have to think again about the timetable for withdrawing support. Extending the business rate holiday in full and keeping VAT for tourism and hospitality at 5% until April 2022 would give businesses more confidence and the chance to repair their battered finances. It is also disappointing that it has taken this long for the treasury to find a way to support the newly self-employed.”

“The headline announcement – an eye-watering rise in UK corporation tax from 19% to 25% – may have been intended to reassure the public and the markets that the Government is serious about repairing the public finances in the wake of the COVID-19 pandemic. Unfortunately, it will also alarm many in business. While UK corporate tax rates will remain the lowest in the G7, the rise will not occur for two years, and tapers are planned to protect smaller firms, the rise still sends a powerful message internationally about the UK being open for business and welcoming for businesses. This is the biggest rise in UK corporation tax since Dennis Healey was Chancellor in 1969 and it could deter foreign firms from investing in the UK and Lancashire.”

“Looking further ahead, Lancashire businesses will welcome many of the longer-term initiatives set out by the Chancellor. The ‘super deduction’ on tax for businesses that invest, the ‘help to grow’ scheme to support digital and management training for SMEs and the UK Infrastructure Bank will all be welcomed. The creation of a Freeport in Liverpool will hopefully boost the Lancashire economy and the county should also benefit from the levelling up fund and the new town deals.”

“The Budget seems to be doing just enough to keep the UK and Lancashire economies ticking over, but the Chancellor is not giving himself or Lancashire firms enough room to manoeuvre if the lifting of lockdown is delayed or the recovery that follows is more fragile than expected. The Government’s bold, ambitious plans for the post-Covid economy are welcome, but are based on very optimistic assumptions about how quickly businesses and growth can bounce back.”

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