-
Autumn Budget 2017: A Hinderance or a Help for Investors?
November 21, 2017 -
As the UK comes to grips with Chancellor Philip Hammonds Autumn Budget 2017, we find out how investors have reacted.
Philip Hammond, chancellor of the exchequer, today laid out his plans for the future of the UK economy in the Autumn Budget 2017.
With Brexit, the deficit and public services and welfare all under the microscope, the chancellor offered a “balanced budget to prepare the UK to tackle the challenges of Brexit head-on.
The budget, while tempered and criticised for being ‘boring’, offers the UK a glimpse into what the nation will be like after Brexit. Mr Hammond jabbed and prodded at the Labour party over inherited economic problems, while offering a chance to reduce borrowing and make the average British life easier with a healthy dose of conservative realism.
Investing in the future
Stuart Veale, managing partner, Beringea says, “We welcome the changes Chancellor Hammond has announced in today’s Budget to support fast-growth businesses.
“As the response to the Financing growth in innovative firms: consultation makes clear, the UK is seen globally as a “place for growing businesses to obtain the long-term patient finance they need to scale up”. We are delighted that the government recognises the positive economic impact that Venture Capital Trusts (VCTs) have had. It is clear from the review that VCTs are a very effective source of Patient Capital and support the growth of the UK economy. In fact, companies currently backed by the VCT scheme have created 27,000 jobs since the date of the first investment by a VCT.
“We are also glad to see a recognition that more needs to be done to support British businesses at the scale-up stage alongside supporting the thriving funding ‘ladder’ at earlier stages – including SEIS, EIS and VCTs. In particular, the Budget addressed this by announcing that the annual investment limit for knowledge-intensive firms will be doubled from £5 million to £10 million through the EIS and by VCTs. We believe this will begin to address the funding gap for growth capital which is most acute for companies seeking between £5 million and £20 million.”
Sacha Bright, CEO of businessagen, agrees, saying, “Hammond’s budget today will be welcomed by the alternative investment community. More money to the British Business Bank is likely to feed through to the peer-to-peer (P2P) community and changes to EIS and VCT investments are about trying to encourage more direct investing in genuinely entrepreneurial companies which is what crowdfunding is all about.
“It seems clear that the government is targeting large sums of money invested in tax-vehicles, rather than growth company investment vehicles, with the EIS and VCT changes. This makes it awkward for some investment managers for whom tax efficient investment in so called ‘safe investments’, where the risk to your capital investment is minimised as much as possible, has been highly profitable. In effect HMRC policing of the types of companies that are eligible for EIS and VCT funds will be stricter and this may put off many current investors who prefer some degree of reassurance from their high risk growth company investment.
“But for those investors looking for long term growth in young, entrepreneurial companies the changes should be welcomed. Increased limits could make a big difference and whilst the tap of money from fund managers may temporarily reduce in flow, there appears to be an awareness and support of the role that crowdfunding has to play in funding these companies. All in all we think the news today has been positive for young, growing companies, particularly those in the digital space; direct investment is being encouraged and government funds are being deployed.”
Growth Business
-
-
More news
