22 budget Barclays Corporate hosted a post-Budget breakfast and discovered . . . Optimism amongst the gloom


Maybe it was the sunny Spring morning, but there was a definite upbeat mood among the 100-plus invited business guests who gathered at Reading’s Hilton Hotel for this satellite-linked national discussion – and locally the Budget got a resounding thumbs-up


A breakfast-table survey showed that three out of four attendees felt that the Government now had a clear path to generate economic growth. Importantly, bearing in mind public sector cutbacks, 89% felt the Budget growth plans would have a positive impact on private sector growth.


And, although three out of four respondents said their confidence about growing their own business remained the same following the Budget, only three individual respondents revealed less confidence. While investment plans were still on hold for most, there was a strong feeling that a more favourable environment was being created for UK businesses.


Ian Workman, head of Solent & Dorset, Barclays Corporate, explained the local perspective: : “While some of the measures outlined in the Budget such as the accelerated reduction in corporation tax will have a real and almost immediate impact on Solent-based companies, the most important aspect of this Budget is the positive signals it sends to a corporate sector which has been seeking both stability and reassurance from Government around its underlying stance towards business”


Banks needed to enable businesses to move forward with confidence about their strategies and to take advantage of opportunities as they arose, and, in doing so, help maintain levels of activity and dynamism within their clients’ markets, he added.


The nationwide Budget review was staged live from London, hosted by Ian Stuart, MD of Barclays Corporate UK & Ireland, with Graeme Leach, chief economist of the IoD; Richard Woolhouse, the CBI’s tax and fiscal expert; and Paul Robinson, head of European FX Strategy for Barclays Capital.


The chancellor’s fuel manoeuvres, reduction on Corporation Tax, reintroduction of Enterprise Zones, support for SMEs, moves to simplify planning, taxation, and reduce red-tape were all seen as well-played cards in his restricted Budget hand. Potential interest rate rises, Eurozone finances, inflation risks, falling consumer spending, pensions and mass public protest, were each viewed as future difficult tricks to play.


Confidence remained an underlying topic; the consensus being that the business community was perhaps more optimistic than consumers. Pressure on domestic finances – some families are spending £1 in every £10 on fuel, it was revealed – might lead to retail sector problems, and slow the UK recovery.


Recessionary gloom may be receding, but there are still nerves about the future.


www.businessmag.co.uk


But soon, questions were flying in from all areas and all angles.


(Note: Panel answers are composite and summarised responses)


From Bromsgrove: Given the Budget downgraded growth forecasts, is the current pace of spending cuts correct?


Panel: Slowing down or going into reverse now would send out the wrong message and lead to problems. Plan A should not be abandoned but it might get nibbled at the margins. We are in for a long haul; individual growth forecasts should be viewed only as a guide to the right track.


Norwich: Is the MPC inflation target of 2% still appropriate?


Panel: Yes, to change it now would unsettle international markets. It is only a target. Growth can still happen despite our current higher inflation.


London: Is the Budget’s 10% IHT dispensation on charity legacies a move to change UK culture?


Panel: It could be a move towards the Big Society, but such charitable giving is already almost a social norm among some UK communities. Could there be similar dispensations in other taxation areas in the future?


Cobham: What is the panel’s biggest post-Budget fear?


Panel: Lack of growth leading to a Japan-style scenario of economic stagnation. That there’s less petrol in the UK economy than the OBR estimates. Inflation.


Crewe: How will the Budget increase consumer spending?


Panel: The Budget wasn’t really about increasing spending; it was about bedding-in economic stability.


Reading: Is the honeymoon over for Cameron and Clegg?


Panel: No, but Scottish, Welsh and local elections results might increase upward pressure


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – APRIL 2011


from political ‘grass roots’, not to mention the AV referendum.


Manchester: Will 50% Income Tax be reduced before growth is affected and more wealth- makers leave the UK?


Panel: Although a lower rate would be desirable from a business perspective, the same cannot be said from a public perspective. It was imposed as a temporary measure but reduction now would be seen as a massive tax break for the rich. No early change likely.


London: Is flagging up long-term tax changes (falling Corporation Tax, possible reduction in 50% top rate etc) a good thing?


Panel: It’s a good thing, setting the ‘mood-music’ and promoting the country abroad as a low-tax economy. It helps promote stability, confidence and transparent government.


Bristol: Is media coverage damaging public consumer confidence?


Panel: 24/7 worldwide communication has given the media more influence. By nature in the mediaworld, bad news has always travelled more quickly and extensively than good news.


Barclays Corporate MD Ian Stuart summed up the businessworld view. “Business investment is going to be one of the key factors in how much economic growth we can achieve this year. If businesses collectively gain the confidence to invest a little more readily as Budget measures start to positively impact on individual operations then George Osborne really has achieved something meaningful.”


Details: Ian Workman 07775-543496


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