Chancellor to attempt to motor engine of economic recovery with business-friendly Budget

This year, the Budget should help companies out, to enable them to start investing more and get the recovery moving. Photo: Reuters

Budget speeches are an exercise in bravado but occasionally something a Chancellor says returns to haunt him.

Three years ago George Osborne signed-off with a boast that he had “put fuel into the tank of the British economy”.

For a long time afterwards the British economy responded by doing a passable impression of a car that wouldn't start and, at times, threatened to roll backwards, but now?

Now, finally, we’re motoring.

The recovery to-date has been driven by the consumer but, as the Chancellor has made clear, if it's going to endure then Britain’s businesses need to step up a gear.

Put bluntly: we need companies to invest.

Whether it’s in updating computer systems, advertising or expanding a factory production line, the money spent will generate jobs and (all being well) take-home pay should go on to rise.

In an economic recovery you would think there’s every incentive for companies spend, but tax breaks always help.

Businesses have asked the Chancellor to extend his Annual Investment Allowance (due to fall from £250,000 to £25,000), the noises off suggest he probably will.

The Chancellor’s Carbon Floor Price (Budget 2011) is getting some of the blame – it is designed to discourage the use of fossil fuels to generate electricity but even ministers accept it has significantly forced up bills. Companies want a price freeze. The smart money is on them getting one or something similar.

The Budget falls on the day when the latest unemployment figures are released and you can expect more help for young people to find a job.

The government's apprenticeship schemes have proved popular but they’re heavily over-subscribed.

There’s general agreement that the system of Business Rates (think council tax for companies) needs reforming but companies have yet to intrigue a better way of raising £27 billion for the Chancellor.

George Osborne announced a general cap in his Autumn Statement as well as reliefs for the smallest businesses so he may feel this is this is one for another day.

Personally, I’ll be looking out for housing. Home builders like Barratt and Persimmon adore the Chancellor’s Help to Buy scheme.

Since it was launched a year ago their profits and their shareprices have soared, so too has the number of new homes they are building but on nothing like the scale society needs.

Accusations that Help to Buy is causing a house price bubble also persist, George Osborne may feel minded to address the unease.

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