In common with some other Member States, the United Kingdom does not have an Economic and
Social Committee. This memorandum summarises the main British Government measures and
the reactions of stakeholders such as employers, Unions and the media.
1. MAIN STIMULUS MEASURES
i. Cut in VAT from 17.5% to 15% (estimated to be worth ?12 billion). ii. Temporary increase in the threshold for rate (local taxes) relief on empty
iii. Exemption from tax on foreign dividends received by large and medium
groups on most shares.
iv. More generous tax relief for businesses making losses by allowing temporary
additional carry-back of up to ?50,000 of losses to be set against taxable
profits from the last 3 years.
v. A deferment of a proposed increase in small companies‟ corporation tax
retaining the rate at 21% for 2009/2010.
vi. Helping SMEs with working capital and investment needs with a Small
Business Finance Scheme through a new temporary guarantee scheme to
enable up to ?1 billion of new government support for lending by banks. vii. UK small businesses should also be able to benefit from around ?4 billion of
lending from the European Investment Bank (EIB) between 2008 and 2011. viii. A new Business Payment Support Service for businesses in temporary
financial difficulties permitting them to delay payment of all taxes. ix. Bringing forward of ?2.9 billion of already budgeted public sector capital
spending by 1 year. This includes ?700 million for road and rail, ?775
million for housing and regeneration, ?800 million for schools, ?442 million
for further and higher education and ?100 million for health services. x. A boost to training and apprenticeships
xi. A temporary guarantee scheme to support a ?1 million facility providing
smaller exporters with better access to short term working capital and an
extension of the Fixed Rate Export Finance Scheme for another year after the
end of 2008.
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2. BUSINESS AND UNION REACTIONS
The Government‟s handling of the economic crisis has been criticised by both business and
the Unions. Both call upon the Government to implement a more effective strategy to fight
The employers‟ body, the Confederation of British Industry (CBI), complains that the
Government‟s economic recovery plans “lack a coherent strategy and timeline”. The CBI is
also critical of what it calls the „welter‟ of recent initiatives such as those summarised above.
Britain‟s biggest Unions are concerned that the Government‟s plans are insufficient without
„urgent assistance to UK manufacturing‟. They are calling for „crisis talks‟ with the
Chancellor of the Exchequer for a „strategic support package‟ for the car industry.
The increase in the British jobless rate is naturally of concern to the Unions but is now
coming to be widely shared by the working population and by the media. Signs of concern
are everywhere from reduced numbers of British people taking their holidays outside the
United Kingdom to trading down to cheaper restaurants or takeaways!
3. MONEY MARKET TENSIONS
There is increasing concern that the Bank of England may resort to „quantitative easing‟. The
phrase is coming to be interpreted as printing money and is criticised as being a charge on
Chairman, Section on the Single Market, Production and Consumption