A FEW days ago I visited a business near my office on the Staffordshire Technology Park. Founded in 2005, they now employ 80 people. The owners have just invested heavily so that they can expand and take on more staff.
This is one local indication of how the economy is continuing to recover and doing so faster than forecast. GDP is forecast to grow by 2.7% in 2014, faster than the US, Germany or France. Government borrowing is predicted to fall to 5.5% of GDP this year, and then to 0.8% by 2017-18. We can compare this to 2009/10 when the UK’s borrowing was 11% of GDP, similar to that of Greece.
However as the Chancellor said in his budget speech, there is still a great deal more to do. As a country we still do not invest, export or save enough.
Exports are critical to our economy. We still run a large trade deficit. So direct export finance has been doubled and the interest rates on the lending scheme cut. To encourage business investment, the investment allowance has been doubled to £500,000.
Fuel costs and energy are increasingly significant for both homes and businesses. Therefore the planned fuel duty rise has been scrapped and other measures taken to keep energy prices down.
The cost of employing staff has been cut through a £2,000 annual reduction in National Insurance for every employer.
The UK has one of the lowest savings rates in Europe. To encourage us to save more, the tax-free limit for ISA’s has been raised to £15,000; and pensioners will no longer have to buy an annuity – giving them more freedom on how to use their pension pots. At the same time, the raising of the personal tax allowance to £10,000 this year and £10,500 in 2015/6 will benefit more than 20 million taxpayers, helping to increase take-home pay.
Of course, there can be no room for complacency, but the good news is that the UK is making sound progress economically.
I would also like to take this opportunity to wish you and your families a very Happy Easter.