“Today’s emergency Budget sets out painful measures for individuals and businesses. Industry hopes the certainty they provide will create financial stability, confidence and growth,” said Paul Everitt, SMMT chief executive. “Although there are concerns about the rise in VAT, its delayed introduction will give industry an opportunity to prepare and may boost demand in the short-term. The determination to increase bank lending and investment in new low carbon technologies is welcome, but effective measures are urgently required to help sustain a still fragile recovery.”
The increased rate of VAT will add around £300 to the price of an average car, potentially impacting on private buyers’ confidence and demand, but industry welcomes the delayed timeframe, allowing time for businesses and consumers to plan and prepare.
The plan to lower the corporation tax rate from 28% this year to 24% in 2014 is a welcome measure that incentivises and enables businesses to plan for the future with confidence, continuing with investment in new technologies and product development and creating more jobs. We remain concerned over lower capital allowances, these may impact on business investment and demand for vehicles.
Government action to ease access to affordable finance can only help support private sector investment in skills, innovation and technologies at a crucial period of recovery. Support for manufacturing, the digital upgrade, no further changes to fuel duty or VED rates and the confirmation of plans to establish a Green Investment Bank are also welcome measures that will support our businesses commitments to the UK.
The UK automotive industry looks to continue its collaborative work with government. Through the Automotive Council, industry will strive to keep the UK at the centre of the global low carbon agenda and a prime base for investment in a country that the chancellor described as “open for business”.