These are interesting times for businesses trading internationally and not necessarily in a good way! As if Brexit wasn’t enough, Covid-19 is now impacting and will continue to impact international supply chains. Measures announced in the Budget to cushion the impact on SME businesses will provide some relief depending on how things develop, but to businesses exposed in a major way to the affected economies this will be cold comfort.
The monetary policy measures announced by the Bank of England on the morning of the Budget did affect the value of Sterling given the cut in interests rates. Though, coupled with the relaxation of the capital buffer requirements for banks, the measures are most likely to have a beneficial effect domestically.
The main headline in terms of international comparisons was the announcement to maintain the rate of corporation tax at 19% and thus, not following through with the reduction to 17% later this year. To put it into context, when I began my training the rate was 33% and the rate of 19% is still very competitive amongst our peers.
The Budget did include measures to support international trade given it is the Government’s first opportunity to set an independent trade policy in over 40 years. This includes piloting a digital trade network in the Asia Pacific region, increasing manpower to support international trade outside of London and increasing the lending capacity of UK Export Finance coupled with expanding face-to-face support for exporters in the North of England and Scotland focussing on clean growth. Though clearly, the final point will have little impact regionally.
