The British chancellor Rishi Sunak has outlined the state of the UK’s finances as it begins to emerge from the global Coronavirus pandemic.
During his Budget 2021 speech, the chancellor said that the UK’s economic recovery will be ‘swifter and more sustained’ than thought, and that corporation tax will increase to 25 percent from 2023 as part of plans to assist the public finances.
But in the meantime, in a piece of good news for businesses, the 100 percent business rates holiday in England will continue from April until June 2021.
To highlight the scale of the economic challenge presented by the Covid-19 pandemic, the chancellor said that the amount borrowed is comparable only with that borrowed during the two world wars.
It will be the work of many governments, over many decades, to pay back, he added.
Other developments in the 2021 budget is the extension of the furlough scheme – which pays 80 percent of employees’ wages – until the end of September 2021.
And an additional 600,000 self-employed people will be eligible for financial help, as access to grants is widened.
The Budget 2021 also put technology at the centre of spending plans going forward.
For example the government unveiled visa reforms so as to attract top talent to the UK.
This includes a new unsponsored points-based visa for science, research and tech workers, as well as an expansion of the existing visa programme for scale-ups and entrepreneurs.
And in another piece of good news for the tech sector, Sunak also confirmed the launch of a new £375m fund that will see the government invest in fast-growing UK tech startups.
It is called the ‘Future Fund Breakthrough’ and it will offer grants to R&D-heavy firms aiming to raise up to £20m, with taxpayer money matched by private sector investment.
Meanwhile there is also a new ‘Help to Grow’ scheme, aimed at supporting smaller businesses, which includes free digital skills training, as well as a 50 percent government contribution towards productivity software up to £5,000.
But one of the most notable developments from the chancellor, is the raising of the spending limit of the contactless (tap and go) payment system on debit cards.
For the past few years the limit has been £30, but during the start of the pandemic the UK government took the decision to raise the spending limit to £45 on contactless payments for hygiene purposes, so people could avoid having to exchange paper money and coins with shops.
But now the UK is more than doubling this limit, with the new spending ceiling capped at £100 on contactless payments made with debit or credit cards.
This move reflects the shift to electronic payments which has surged during the Coronavirus pandemic. The government said that the proportion of debit card payments using contactless rose from four out of 10 in 2019 to six out of 10 in September 2020.
The change will legally in force from Wednesday, but it should be remembered that it could take shops and retail outlets time to change their internal system limits from the current £45 ceiling.