The £11 billion headline figure for the value of tax concessions to UK business contained in the Budget may appear eye-catching at first but it is, of course, spread over the next five years. Larger corporates are mostly unaffected since Corporation Tax cuts for the next year or two have already been announced.

The real beneficiaries of the 2014 Budget are medium sized manufacturers who both export and consume a lot of energy. They will now be able to enjoy a doubled annual investment allowance of £ 500,000 in respect of new equipment and, according to the Chancellor, will save an average of £50,000 a year on energy costs as the result of the cap on the Carbon Price Floor. Moreover, if they export overseas, they will be able to access a further £1.5 billion of credit via the UK Export Finance scheme.

It is not difficult to see why this section of the business community has been singled out for such favourable treatment. Quite apart from his well-trailed domestic political considerations like encouraging investment outside London and the South East and shifting more of the economy into the regions, the Chancellor is anxious to start closing the trade deficit in goods and to switch responsibility for future economic growth away from British consumers.

In fairness, the vast majority of smaller businesses are likely to be largely unaffected by this budget since they don’t make things and they don’t export physical goods. The only thing that might help them is the extension of the apprenticeship scheme to provide another 100,000 places and the National Insurance exemption for all under 21 year olds.

The implication of a budget that really only affects a relatively narrow section of the business world is that Mr.Osborne and his colleagues no doubt feel that industry is already managing very well on its own and, if it ain’t broke, why try and fix it. The economy is now officially growing at nearly 3% a year, faster than every other developed nation, and too much stimulus from the Chancellor could prompt Mr. Carney to start sharpening his interest rate pencil even faster. The housing market, in particular, is now firing on all cylinders and this always has a big knock-on effect on other businesses such as furniture, floor coverings and other fittings.

The two big areas of interest to the business world that remain unresolved are what the Government is going to decide about tax avoidance / evasion by multinationals and how the business rate regime is going to be reformed to help the High Street compete with the Internet.

The underlying message is that, despite all the headwinds from a depressed Eurozone and from the strength of Sterling, the UK economy already has all the co-ordinates set for a very busy pre-election boomlet. Businesses probably don’t have to worry too much about a rise in interest rates to rein in excess demand until after May 2014.


Read Baker Tilly’s full Budget 2014 analysis and what it means for your business >>