PwC NI 2023 Spring Budget Comment

NI Economic Outlook

PwC’s NI Economist, Greg Boyd said: “It is positive news for Northern Ireland that the UK as a whole is no longer forecast to experience a recession this year, while inflation is forecast to continue to fall from its recent peak. Today’s budget also touched on key areas that PwC NI has long highlighted; including the need for sustainable economic growth, supported by investment in productivity and skills.

“It was reassuring to hear the Chancellor's measures to ease cost of living pressures, which are still a critical issue for people in NI, and also his longer-term focus on key levers for economic growth here, including stimulating investment, getting more people into work, and underpinning all of this with the importance of skills and education.

“Our analysis shows that households in Northern Ireland are on average more exposed to recent inflation, in particular on energy and food prices. It is therefore welcome that the Chancellor has announced a greater level of support in the short term, protecting households from continued high wholesale energy costs. Further announcements by the Chancellor will help to support household budgets - including freezing fuel duties for the next twelve months and reducing duty on draught in pubs.”

Tax implications for businesses

Áine O’Hare, Tax Lead Partner and International Business Lead for PwC Northern Ireland, said:

“This was a budget focused on promoting stability and creating a competitive landscape for businesses, which will hopefully enable NI businesses to create the right environment for growth and also attract inward investment here.

“On the issue of Corporation Tax, it is anticipated that only 10% of companies will actually pay this full rate of 25%, with the incentives and other reliefs available in the UK.One of these incentives is the introduction of full expensing for capital expenditure on new plant and machinery which will be welcomed by the many manufacturing companies in NI.

“A boost for research and development (R&D) intensive small and medium sized businesses came in the form of an increased R&D credit today. This is welcome and significant because we expect that many NI companies in the life sciences and software industries will benefit from this, especially the growing number of local start-ups in these sectors.”

Education and workforce participation

PwC NI Regional Market Leader, and PwC UK’s Education Consulting Leader, Cat McCusker, said: "I am pleased to see the Chancellor's continued commitment to the development of Maths skills, and the £40m commitment to extend participation in further and higher education in Northern Ireland.

"Further and higher education organisations here play a significant role in contributing to our economic development, and to developing the skills we need to grow our economy.

"Given the significant budget pressures all public sector organisations are facing into next year, this welcome investment will go a long way to helping us cultivate a strong, local, and highly skilled workforce for Northern Ireland."

“The Chancellor’s focus on childcare and support for women, and the over 50’s participation in the workforce is also important to note. Our recent Women in Work Index showed that while the outcomes for women once they enter the labour market in NI are much better than other regions, the fact remains that there is a lower proportion of women working here in the first place and this needs to change.”