Pre-Budget Report broadly welcomed in NI

There was a largely positive response in Northern Ireland today to Chancellor Gordon Brown's Pre-Budget Report (PBR) in Parliament yesterday.

Mr Brown's assessment that spending plans remain affordable despite announcing a £9 billion hike in borrowing to make up the shortfall were shared by many in the province including business advisors, PricewaterhouseCoopers (PwC).

PwC chief economist Philip McDonagh said the chancellor's hike in spending would be relatively good news for Northern Ireland and that his aim in maintaining spending plans, while delivering some welcome social initiatives to help the less well-off, "may help the economy swallow some unpleasant global economic medicine".

PwC also welcomed the Chancellor's announcement of the creation of 2,000 new Enterprise Areas which aim to benefit from a package of measures intended to improve conditions for businesses within these areas.

PwC’s Belfast tax partner, Geoffrey Ruddock, said that the Chancellor recognised the importance of stimulating small business investment in disadvantaged areas and the indications are that these new areas are, in fact, an extension of existing incentives. He added: “In late 2000, the Chancellor announced incentives intended to boost enterprise in disadvantaged areas, which included a Community Investment Tax Credit (CITC) to encourage investment.

“The 2001 PBR also changed the rules for Stamp Duty, exempting more than 40% of Northern Ireland’s 566 wards from Stamp Duty on properties costing less than £150,000.

“There is every reason to suppose that today’s ‘new’ Enterprise Areas represent additional benefits for the wards the Chancellor named last year. But, as usual, we will have to wait for the small print to be certain.”

However, not all small businesses are likely to welcome the report. According to the Northern Ireland branch of the Federation of Small Businesses, many were disappointed at the failure to extend to sole traders tax breaks which are enjoyed by small limited companies.

The FSB’s Northern Ireland Budget Spokesperson, John Hurson, said: “We had hoped for a first step in balancing out the tax regime as between sole traders and limited companies today but there was no mention of any moves in this area.

“We now predict that sole traders and partnerships will be driven into incorporation and we shall be campaigning on this issue immediately.

"We do however welcome the improvements to the Small Firms Loan Guarantee Scheme to take in retailers and motor mechanics among other small businesses”.

Welcoming the Report, Finance Minister Ian Pearson said that Northern Ireland's economy remained well placed to respond positively considering its current low levels of unemployment, inflation and interest rates.

(MB)