Bank of England raises interest rates to highest level in 14 years


The Bank of England (BoE) has raised the base rate of interest to the highest level in 14 years.

The BoE raised interest rates for the tenth consecutive time on 2 February with a half point increase taking the base rate from 3.5% to 4%.

The decision was taken after the Monetary Policy Committee (MPC) voted by a majority of seven to two to increase the base rate by 0.5%.

The MPC said it is confident that inflation has peaked and its approach is the right route to get it back under the 2% target.

David Bharier, Head of Research at the British Chambers of Commerce (BCC), said:

‘The Bank’s decision to raise interest rates for a tenth consecutive time continues its hard-line approach to inflation, but this is not without serious side-effects.

‘Our research shows that while inflation remains by far and away the top concern for businesses with 80% citing this in Q4 2022, concern about interest rates has risen sharply with 43% now citing this.

‘With the Bank expecting inflation to slow to around 4% by the end of the year, further rate rises could now simply add to the risk of a deeper recession, outweighing the benefits.’

Internet link: Bank of England website BCC website

Government launches consultation on R&D relief


The government has launched a consultation on simplifying the UK’s research and development (R&D) tax relief system, driving innovation and growing the economy.

The consultation runs to 13 March 2023 and sets out proposals on how a single scheme could be designed and implemented.

This would replace the two R&D tax relief schemes currently in place – the Research and Development Expenditure Credit scheme and the small and medium enterprises R&D relief.

This is part of the government’s ongoing R&D tax reliefs review, and follows changes announced at Autumn Statement 2022 where the generosities of the two R&D tax schemes were broadly aligned.

Victoria Atkins MP, Financial Secretary to the Treasury, said:

‘We are focussed on growing the economy – with thriving businesses bringing more jobs, higher pay and more tax revenue to fund our precious public services.

‘Getting R&D tax relief right and fit for the future sits at the heart of making sure the UK remains a competitive location for cutting edge research – helping new firms grow.

‘I welcome views on the option to simplify the scheme, especially from those who have experience of the existing tax reliefs.’

Internet link: GOV.UK

Fewer firms investing in training despite skills shortage


Fewer firms are increasing their investment in training and development despite a skills shortage, according to a survey by the Confederation of British Industry (CBI).

The survey found that the proportion of firms intending to increase investment in training and development over the next year has fallen.

It also showed a widespread lack of awareness of key government skills reform programmes, including around the Lifelong Loan Entitlement and the Local Skills Improvement Plan.

Of the firms that do not offer apprenticeships, the key reasons for not doing so were identified as a lack of compatibility between current apprenticeship standards and skill needs; the complexity of administration; and greater relevance of other forms of training.

Matthew Percival, Programme Director for Skills and Inclusion at the CBI, said:

‘Businesses and government need to be pulling every lever to tackle the labour shortages that are holding back growth and putting business investment at risk.

‘Increasing business investment in skills is important and possible, but will require government and businesses to work together to remove the barriers that stand in the way. For example, by remodelling the Apprenticeship Levy into a Skills Challenge Fund – a measure strongly supported by the business community – we can boost employer skills investment and business performance while supporting the government’s skills reforms.’

Internet link: CBI website

Brexit deal not delivering for businesses


Over half of UK companies currently face difficulties in adapting to the new rules for trading goods with the EU, according to a British Chambers of Commerce (BCC) survey.

The survey also found that 77% of respondents who exported were unable to identify any growth as a result of the rule changes.

The post-Brexit trade deal, the trade and co-operation agreement (TCA), sees British and EU businesses facing no tariffs when sending goods in either direction.

However, there is extensive paperwork and red tape, alongside difficulties in getting visas approved for staff (44%).

The BCC has sent the government a report setting out the main issue the TCA is causing with solutions to many of the problems.

These include reaching agreement on the Northern Ireland Protocol and supplementary deals to reduce complexity for food exporters and exempt smaller firms from VAT requirements.

Shevaun Haviland, Director General of the British Chambers of Commerce, said:

‘Businesses want political leaders on both sides to move on from the debates of the past and find ways to trade more freely.

‘This means an honest dialogue about how we can improve our trading relationship with the EU. With a recession looming we must remove the shackles holding back our exporters so they can play their part in the UK’s economic recovery.

‘If we don’t do this now then the long-term competitiveness of the UK could be seriously damaged. It is no coincidence that during the first 15 months of the TCA we stopped selling 42% of all the different products that we used to.

‘Businesses feel they are banging their heads against a brick wall as nothing has been done to help them, almost two years after the TCA was first agreed. The longer the current problems go unchecked, the more EU traders go elsewhere, and the more damage is done.’

Internet link: BCC website

Plymouth and South Devon freeport gets go ahead


The Plymouth and South Devon freeport has received final government approval.

It will now receive up to £25 million in seed funding to help boost investment and support the growth of regional businesses.

Freeports benefit from a range of measures, including tax reliefs, customs advantages, business rates retention, planning, regeneration and trade and investment support.

Tax incentives include enhanced capital allowances, relief from stamp duty land tax and employer National Insurance contributions for new employees.

Eligible new businesses moving into a freeport tax site, and some existing businesses that expand will also benefit from full business rates relief.

The approval will help accelerate the formation of advanced manufacturing clusters in marine, defence and space sectors, as well as delivering an estimated 3,500 jobs.
Dehanna Davison, Levelling Up Minister, said:

‘Today is a historic day for Plymouth, South Devon and beyond, as the Plymouth and South Devon freeport gets up and running to drive growth and innovation locally and nationally.

‘The freeport is going to shape the fortunes of the Plymouth and South Devon economies by pumping up to £100 million worth of investment across the region.

‘We are maximising the opportunities of Brexit to drive growth and throw our doors open to the world.’

Internet link: PLYMOUTH.GOV.UK

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