Britain has been criticised for failing to provide any notable support mechanisms for small businesses in the North in its latest budget, even though an additional £650m (€733m) for the North’s economy was welcomed.
“There was an obvious lack of measures to support SMEs, which are the backbone of the Northern Irish economy,” said Michael Hall, managing partner at EY’s Belfast
“Measures to encourage capital expenditure such as the annual investment allowance or to further enhance R&D tax credits for SMEs, as there was for larger companies, would help to promote productivity and innovation at such a crucial time,” he added.
However, Mr Hall said the review of air passenger duty and Vat on tourism in the North was a positive step, and he backed the £650m in extra funding.
“One of the key concerns of Northern Irish business is the efficient movement of goods across the border with the Republic.
It is vital that a significant portion of this funding is targeted at customs preparations to ensure the ease of movement of goods; this is crucial to ensure business continuity as the UK leaves the EU,” said EY tax partner Rob Heron.
In a move with potential implications for firms in the Republic, the UK announced measures to tackle tax avoidance by tech giants and to hold online marketplaces like eBay and Amazon accountable for tax evasion via their platforms.
Mr Hammond said some multinationals were avoiding tax on profits generated from selling to UK customers by using inter-group royalty payments to shift those profits into affiliates in low-tax jurisdictions.
Britain would impose a withholding tax on such payments that could raise around £200m a year, he said.
But Davy economists said the “main budget takeaways” included pessimistic growth forecasts.
“The headline measures were a cut in stamp duty for first-time buyers and increased funding for the NHS; however, the bigger picture is that austerity remains, with big cuts still in the pipeline for the coming years,” Davy said.
Nonetheless, Mr Hammond “eased off on some of the planned welfare cuts in the coming years and announced increased funding for the NHS (£7.5bn) and housing (£6.1bn),” the economists said.
State Street said the UK’s growth outlook was “troubling”. Capital Economics in London said Mr Hammond had unveiled a bigger-than-expected giveaway. “Austerity is not yet over, but there is finally some light at the end of what has been a very long tunnel,” the firm said.