With growth forecasts over the next five years being revised down, further cuts to spending announced, warnings on outlook for the global economy being described as ‘materially weak’ and the UK ‘not immune’ to the impact; there was some, not unexpected, unwelcomed news delivered in today’s budget. However, the UK economy is still forecast to grow faster than any major Western economy, supported by the government’s focus on long term sustainable growth.
Plans for growth in the UK will be driven, at large, by the government’s plans to support business’ interests. This was made clear by several commitments, including the headline rate of corporation tax set to fall from 20% to 17%, by 2020. Successful, profitable companies mean a more sustainable and vibrant economy.
The UK’s digital technology industry is perfectly positioned to to play a major role in helping the government realise its ambitions to drive significant growth. The UK digital economy has recently been reported to support 1.57 million jobs and has contributed over £161 billion in turnover in 2015 to the economy. The Tech Nation report also detailed how the digital tech industry has facilitated job creation 2.8 times faster than the rest of the economy and driven economic growth 32% faster.
The government has frequently recognised the key role the digital economy will play in driving growth in the UK, with David Cameron recently stating, “The digital economy is expanding at an extraordinary pace, creating jobs and fuelling growth in regions and cities up and down the country, adding some £87 billion to the economy every year, providing security and opportunities for working people.
The government has stood foursquare behind the country’s digital transformation, backing new technologies, investing in infrastructure, supporting investment, removing barriers to innovation and helping upgrade the digital skills that a modern workforce needs.”
The UK has long been acknowledged as leaders in technology and the opportunity for the IT industry and tech-led businesses is vast. Large tech companies, as well as SMEs and startups, all have potential to deliver even more impressive outcomes for the digital economy. The annual threshold for 100% relief on business rates for small firms is to rise from £6,000 to £12,000 and the higher rate from £18,000 to £51,000, as announced in the budget. This means exempting 600,000 firms, in another boost for small businesses.
One particular niche in the digital technology economy set to benefit from this announcement is financial technology startups. The UK has more financial technology startups than anywhere else in the world. We now compete on the global stage, in the global community that we helped to create.
In CBR’s most recent article, Mubaloo Chairman, Mark Mason, also applauded the cuts in the headline rate of corporation tax.
Today’s announcements would have done much to encourage business across the UK and for the IT and digital technology companies the changes should help accelerate outcomes in this burgeoning industry.
To read the full report click here.