Issues

Budget reaction

budget_reactionNorthern Ireland’s business community broadly welcomed George Osborne’s Budget.

Reaction to the budget from Northern Ireland’s business community was on balance positive, however the introduction of the minimum living wage was a concern for all groups.

Describing the budget as a “mixed bag’’, the Federation of Small Businesses, Northern Ireland policy chair Wilfred Mitchell, said the new minimum wage, or living wage, would concern the organisation’s members.

“The FSB welcomes the announcement that the UK Government will increase the annual Employment allowance from £2,000 to £3,000. On the other hand, there are a number of our members who will find the new Mandatory Living Wage challenging. There is a real concern over the extent to which additional red tape and regulation will cut into a business’s growth and time.”

The FSB added that the cut in corporation tax should spur the Northern Ireland Executive to set the date and the rate of an NI company tax rate using devolved powers to vary the rate. The group also welcomed the freeze on fuel duty.

CBI Northern Ireland Director, Nigel Smyth, welcomed the cut in corporation tax and the commitment to a permanent Annual Investment Allowance of £200,000, but described the increase in the minimum wage as a “big gamble’’ for Northern Ireland.

“The introduction of a National Living Wage of £7.20 next April, some 7 per cent higher than the national minimum wage will be in October, will be a concern to many businesses and will impact on job creation,’’ Smyth said. “Northern Ireland will be disproportionately impacted. Legislating for a living wage does not reflect businesses’ ability to pay. This is taking a big gamble that the labour market can absorb year-on-year increases of an average of 6 per cent.’’

Ann McGregor, CEO of the Northern Ireland Chamber of Commerce and Industry, said the budget provided stimulus for businesses and the provision for employers to pay less in National Insurance contributions would encourage confidence to hire new workers. Looking forward, she suggested that the cut in corporation tax could open the way for Northern Ireland to introduce a rate lower than that of the Republic of Ireland.

“Cutting the UK corporation tax rate to 18 per cent by 2020 will cut the cost to the Northern Ireland block grant as Northern Ireland looks to implement its own rate of 12.5 per cent,’’ McGregor said. “Although this is welcomed, Northern Ireland could now consider implementing an even lower rate, for example 10 per cent, which would put Northern Ireland at a competitive advantage over the Republic of Ireland.

Addressing the failure to implement the Stormont House Agreement, the Northern Ireland Chamber CEO said it was undermining business confidence in Northern Ireland.

“The responsibility for this ultimately lies with our own political parties,’’ she said. “The Stormont House Agreement must be implemented in full. Deferring decisions such as the ‘date and rate’ for lower corporation tax is impacting negatively on business confidence.’’

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