The UK Coalition Government’s first budget, announced on 22 June, has set out a five year plan to rebuild the British economy based on responsibility, freedom and fairness. It pays for the past. It plans for the future. It supports a strong enterprise-led recovery. It rewards work. And it protects the most vulnerable in our society.
The Coalition Government announced, conducted and completed a review of this current year’s spending and identified six billion pounds of savings. The government has also announced, established and received the report of the independent Office for Budget Responsibility.
The power to determine the growth and fiscal forecasts now resides with an independent body. This early determined action has earned us credibility in international markets. The government has highlighted a determination to reduce Britain’s huge deficit in a way that strengthens and unites the country.
In terms of the fiscal mandate the view of the international community was clearly expressed at the latest G20 meeting and the UK took the same message to the G20 summit in Toronto. The government has introduced a bank levy to encourage banks to move to less risky funding profiles and the UK is delighted that the French and Germans have supported our approach.
The Government will now create a new model of economic growth built on saving, investment and enterprise instead of debt. This is the first step in transforming the economy and paving the way for sustainable, private sector led growth, balanced across both UK regions and industries.
This Budget also sets out a plan to support business and restore the UK’s diminished competitiveness. The government is giving businesses more freedom by reducing regulation and tax rates, whilst refocusing support towards infrastructure, the low-carbon economy and regional development. The measures in this budget are intended to give businesses the confidence to invest for the long term, and to reduce the burden of tax and regulation. It will encourage firms to create new jobs and to help those out of work back into the labour market. It will make the UK more competitive.
The main rate of corporation tax will fall from 28 – 24 percent over the course of the next four years. That is good news for businesses and means that, by 2014, and based on announced plans, this will give the UK the lowest rate of corporation tax in the G7 and fifth lowest rate in the G20. Whilst the standard rate of VAT will increase from 17.5 to 20 per cent from January next year, the UK will still be below the European Union average.
Fairness is also at the heart of this budget. The UK Government is committed to ensuring that every part of society makes a contribution to deficit reduction while supporting the most vulnerable. A rise in capital gains tax from 18 – 28 per cent for those liable to income tax at the higher and additional rate strikes the right balance. The 10 per cent capital gains tax rate for entrepreneurial business activities will be extended from the first £2million to the first £5m of qualifying gains made over a lifetime.
Finally, the government recognises the important role that investment in infrastructure plays in supporting economic growth and UK competitiveness. As the government acts to reduce the fiscal deficit so we will look to encourage increased funding for infrastructure projects from the private sector.
The UK and Nigeria have a strong and growing trade relationship in many sectors, which we are keen to foster. Nigeria is the UK’s second largest market in sub-Saharan Africa after South Africa. The value of UK exports has increased steadily from £535 million in 2000 to £1.3 billion in 2009. Imports from Nigeria were worth £95 million in 2000, rising to £800 million in 2009. The UK is one of the largest investors in Nigeria, with cumulative investment of several billion pounds. What this Budget shows is that the British economy is ‘Open for Business’