With a backdrop of reduced growth forecasts and flatlining productivity, the Chancellor did reasonably well to deliver a relatively upbeat Budget. The two main focuses of his speech were the housing market, particularly for first time buyers, and ensuring the UK remains at the forefront of technological advances, particularly in the fields of electric vehicles and artificial intelligence.
The flagship tax measure announced towards the end of his speech was the removal of stamp duty for first time buyers in the majority of cases. Residential property costing £300,000 or less will be free of stamp duty for first time buyers and properties with a value up to £500,000 will only suffer stamp duty on the excess over £300,000 (a nod to the London market).
There were also a raft of incentives, consultations and funding measures announced to encourage new house building to take it from an annual figure now of just over 200,000 to 300,000 per year by the mid-2020s.
This combination of factors is clearly going to have a significant impact on the economy both nationally and locally. It should also start to bring the residential property market back into a reasonable equilibrium between buyers and sellers and help younger generations to get a foot on the property ladder.
The other significant focus of the Budget speech was on ensuring the UK takes advantage of its competitive edge in the development of new technologies, particularly regarding artificial intelligence, electric vehicles and driverless vehicles.
The significant tax measure here was a doubling of the investment levels that will be eligible for relief under the enterprise investment scheme (EIS), but only for so-called knowledge intensive companies. These companies will be able to attract an annual amount of up to £10m of tax incentivised investment from April 2018 (but still with a lifetime cap of £20m).
There was also a further enhancement to the research and development tax credits regime with the rate of tax credit for large companies being increased from 11% to 12%.
The Midlands, with its strong engineering tradition, is well placed to be at the forefront of these new technologies, so it is encouraging for the local economy to see the EIS relief enhancement in particular.
