Slowest Rate of Growth in UK growth
The International Monetary Fund (IMF) predicts that UK economic growth will fall to 0.5% in 2023.
Russia’s invasion of Ukraine and the Covid-19 pandemic has caused the global economy to shrink, the IMF stated. It has consequently cut its 2022 global growth forecast to 3.2%.
It also said that rising prices and higher borrowing costs are continuing to squeeze households and businesses around the world.
The IMF predicts a 15% probability of recessions in the G7 economies, which include Germany, France, the US, the UK, Japan, Canada and Italy. This is almost four times higher than usual, according to the IMF.
Capital Allowances Super-deductions
The Institute of Directors (IoD) has called on the government to extend the capital allowances super-deduction.
Data published by the IoD found that the super-deduction has had ‘a positive and measurable impact’ since it was introduced at Budget 2021. The data showed that 13% of firms reported that the super-deduction had had a direct impact on their level of investment undertaken between 2021and 2023. For half of these businesses, it was entirely new investment as a direct result of the super-deduction.
Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from new first year capital allowances.
Under this measure a company will be allowed to claim:
a super-deduction providing allowances of 130% on most new plant and machinery investments that ordinarily qualify for 18% main rate writing down allowances
a first year allowance of 50% on most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances.
The relief is not available for unincorporated businesses.
The business group is urging the government to make the super-deduction permanent.
Pandemic Born Businesses
More than £20 billion could be added to the UK economy in the future from the number of additional businesses created during the pandemic, according to research carried out by the Confederation of British Industry (CBI).
Around 800,000 companies were registered in the first year of the pandemic, a 22% increase compared with the previous year.
Access to finance was a key concern for many of the business leaders, with 55% highlighting this post-2020, compared with 42% pre-Covid.
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