As part of the Spring 2021 Budget, the Government announced a new super-deduction policy, allowing companies to cut their tax bill by up to 25p for every £1 they invest, in the hopes of boosting high-powered business expenditure and productivity.
The Institute for Prosperity welcomes this announcement, but it is clear that more policies in a similar vein need to be enacted if the UK is going to undergo the manufacturing revival needed to increase its low rate of growth.
John Mills, Founder of the Institute for Prosperity, said:
"The Government’s recent Budget brought some good news for the manufacturing industry. The new super-deduction policy is a welcome change that will allow an increase in the amount of investment to support a rise in manufacturing output over the next two years. The need for a favourable tax regime for the manufacturing industry is long overdue. The choice to make these investment allowances applicable to more than 100 per cent of the capital expenditure sums involved is doubly important because it provides an incentive that encourages expenditure on the sorts of high-powered investment the British economy urgently needs.
"While this announcement will be well received by manufacturers, it is still only one component we need to kickstart a manufacturing revival in the UK. Without a competitive exchange rate policy, with the Pound near or at parity with the dollar, favourable finance policies for manufacturers, and greater investment in education, infrastructure, and research and development, we will never get our economy to grow fast enough to keep up with the rest of the world. These additional policies, which the Institute for Prosperity recommended in its latest report Manufacturing Unlocked, will ensure we will no longer be staring down the barrel of depressed living standards, lower average incomes and a very slow rate of economic growth"