Chancellor George Osborne yesterday pledged to do much more to help small businesses in the wake of the independent Office for Budget Responsibility (OBR) dramatically downgrading its forecasts for the UK economy.
Despite predicting growth of 2.3% in 2011 just 12 months ago, it now expects the economy to expand by a meagre 0.9% this year and an even worse 0.7% in 2012. Given that GDP has already grown by 1.0% year to date, it is therefore predicting a contraction of 0.1% during the final three months of the year.
Yet the OBR reiterated its belief that the UK will avoid a double-dip recession according to its estimates, though admitted events on the Eurozone could make it unavoidable.
Shadow Chancellor Ed Balls used these figures and Osborne’s rising government borrowing projections, delivered in his largely condemned Autumn Statement, as evidence that the coalition’s extensive spending cuts weren’t having the desired effect, but Osborne was adamant this strategy still represents the right approach.
Nevertheless he recognised the importance of assisting UK firms and labelled the coalition as “a government determined to help small businesses”, outlining several initiatives aimed at improving SMEs’ access to credit.
In addition the government will be consulting on merging Income Tax and National Insurance to help reduce the administrative burden on small businesses, whilst it was also announced that January’s planned 3p hike in fuel duty will be scrapped.