The Budget Boogie
As I sat listening to George Osborne’s Budget the other week I was wondering what major impact, if any, it might have on the banking sector and, of course, on the price of the pint in my hand that lunchtime. Well the ‘journalist tax’ on beer went up by 4p unfortunately and bankers weren’t spared either with the bank levy going up to ensure that the industry didn’t benefit from the reduction in corporation tax, which fell by 2% on 1st April and is due to be cut by 5% in total over the next three years.
As Matthew Barling at PwC commented, “given the government’s objective for London to remain a world leading financial centre, it’s surprising the Chancellor felt it necessary to offset the benefits of the tax cut by increasing the bank levy”. Angela Knight of the BBA fumed that the rising levy “represents an additional fixed cost for larger banks” and pointed out that it controversially includes business that banks are doing outside the UK, calling for arrangements to be put in place to avoid this double taxation.
More encouragingly, there was some support for the technologists of the future with £80 million of ‘new’ money for science in the Budget to fund new national research centres at Daresbury, Norwich and Cambridge, although the money actually came from the bank levy. £180 million is to be spent on 50,000 additional apprenticeship places over the next four years as well, as the Chancellor doubled the number of planned new University Technical Colleges from 12 to 24. According to John Cridland, director general of the CBI, this will “boost the number of science and maths graduates that businesses really need”. Hopefully, some of them may end up designing the algos of the future.
The announcement of new UK enterprise zones, with a doubling to more than 20 such low-tax and low regulation areas now planned, could also potentially impact the financial services industry in that one of the zones covers the Royal Docks area in London’s docklands – could Canary Wharf, and the many banks that are now based there, push even further east away from the City perhaps and develop the wastelands around the Royal Docks? Only time will tell …and the same verdict must be given to the Green Investment Bank (really a fund) that is supposed to help finance all those new energy efficiency and renewable technology companies that will bring jobs back to the UK. They might, but not until 2012 at the earliest as the Chancellor delayed its activation, while adding £2 billion to its coffers.
By the way, ciggies went up too by 50p a packet in the Budget, but thankfully I gave them up long ago. I’d have to have gone outside the pub to have enjoyed them anyway.
• click HERE for the full Budget 2011 report
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