Business leaders want the autumn statement to include an extension of the three-year policy starting next month.
Despite rising concerns over the economy, Jeremy Hunt is certain to reject business pleas to extend a £10 billion tax break intended to promote business investments in the UK during next month’s fall statement.
The chancellor announced the multibillion-pound “full expensing” investment relief at the start of the budget in March, stating that he intended to make it permanent “as soon as we can reasonably do so” in order to support economic growth.
In order to combat Britain’s deteriorating growth forecast, business leaders are getting ready to use a series of Downing Avenue meetings with Hunt during this week and the next to advocate for an extension of the three-year strategy in the fall statement on November 22.
It is anticipated, though, that Hunt will inform bosses that he is powerless to veer due to limitations on public resources, following a dramatic increase in the cost of borrowing for the government in recent months.
Sources close to the administration cited the large cost of the strategy and the vulnerable state of the public finances, despite the chancellor’s planned emphasis on boosting business investment and promoting economic growth.
Full expensing, which was implemented in April to mitigate the impact of a corporation tax increase from 19 percent to 25%, enables businesses to deduct the cost of expenditures in machinery and IT equipment from their profits.
The Office of Budget Responsibility has calculated that the total expense of making the scheme permanent might approach £10 billion annually, despite its initial £8 billion price tag this year.
Hunt has maintained in the past that the program might be extended “when fiscal conditions allow,” but he issued a warning this month that “difficult decisions” would have ato be taken in light of the deteriorating state of the public finances. This month saw the highest prices for long-term borrowing by governments on the financial markets since 1998.
To counter the Conservatives’ declining popularity in opinion polls, the chancellor is facing pressure from Conservative Members of Parliament to reduce taxes.
Federation of British Industry statistics indicate that in the three months leading up to October, business activity in the private sector continued to decline.