North East financial sector vs. PBR
Following Alistair Darling’s Pre Budget Report on Monday, the region’s financial experts have been passing judgement on the new measures - and the results are not entirely favourable.
Tim Porter, tax partner at PricewaterhouseCoopers LLP in Newcastle, said:“As has been widely speculated, the Chancellor has given a substantial fiscal boost to the economy. The extent to which this will ease the economy’s woes remains to be seen.
“Every little helps but I expect most retailers will feel [the cut in VAT] makes too little difference to price to change spending behaviour and they will experience significant logistical difficulties in implementing the change.”
Stephen Hall, partner of entrepreneurial business tax at Deloitte in Newcastle, emphasised the measures implemented to aid small businesses: “We welcome the fact that the Chancellor has announced a number of relatively small measures which together will certainly help entrepreneurs and SMEs in the current economic environment.
“On the face of it there is a massive pot of up to £3 billion available to the UK’s growing businesses. The big question is how, how much and how easily they get their hands on it. Entrepreneurial businesses need funds to flourish and all the measures in the Chancellor’s Pre-Budget Report, most especially the access to cash, will focus the mind of the UK’s entrepreneurs.”
John Richards, managing partner at accountants and business advisors RMT, said: “The general principle of the Pre Budget Report is that Chancellor Alistair Darling is helping the lower paid now at the cost of the higher paid later on, as well as to boost the economy by reducing the rate of VAT. These benefits are temporary and the Chancellor’s assumptions have perhaps been more optimistic in order to offset the negative reports on the economy in the press.
“The VAT amendment will have a big impact on business systems which will have to take the reduction into account. Changing payment systems may be easy for some organisations, but for others it could be difficult - and there is a hidden cost implication which businesses will have to absorb.”