PwC NI Spring Budget 2024 preview

Labour Market and Skills

Caitroina McCusker, Regional Market Leader at PwC Northern Ireland, says:

“Since the pandemic, the number of older inactive workers in the UK has dramatically increased, contributing to a workforce deficit. Our Golden Age Index shows this is particularly prevalent in Northern Ireland, which has one of the lowest employment rates (60.5%) for older workers in the UK.

“Convincing older workers to return to work will be crucial in dealing with labour shortages as well as filling vacancies with experienced staff. Policies that support and incentivise this, including corporate incentives like NIC relief or a ‘super deduction’ for employment costs if an employer employs targeted populations, could provide a big boost to the economy.

“The Chancellor has already introduced measures to address the issue, including the WorkWell service announced at last year’s Spring Budget and the Back to Work plan at the Autumn Statement. So we wait to see if there is more support to come.”

Economic overview

Greg Boyd, economist at PwC Northern Ireland, says:

“With the wider UK economy experiencing a technical recession at the end of last year, eyes will be on the Chancellor on Wednesday to see what he will do to garner confidence in the prospects for an economic recovery. 

“Our recent UK Economic Outlook showed there are reasons why the NI economy may be more resilient to the slowdown, as we estimate that it grew at a faster rate than most of the rest of the UK in 2023. With more political certainty in place, we hope that the Chancellor will use the Spring Budget to announce measures that will do more to drive long-term economic growth in Northern Ireland.

“The priority should be on driving investment in the longer term for economic growth here, including stimulating inward investment and accelerating support for skills and education. While policy in this area is largely a devolved matter, we hope to see more detail on an Investment Zone in Northern Ireland and UK-wide measures that can contribute to competitiveness.”

Tax implications for businesses

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

“The key thing for businesses here is the need for consistency and stability to facilitate growth and investment. Measures that help address skills challenges and get people back into the workforce will be welcomed as they will help contribute to create the right environment for growth and also allow us to continue to attract inward investment.

“Building on the welcome return of Stormont, we would like to see whether any fiscal incentives might be offered through freeports and investment zones announced for Northern Ireland (these were previously announced for parts of GB only). Any potential tax savings and enhanced reliefs for local businesses and investors would be welcomed.” 

Mari McLarnon, Tax Director for PwC Northern Ireland, said: 

“Clear and certain tax relief policies are essential for making informed decisions on investments in research and development. Confirmation made in last year’s Autumn Statement that the SME and large company R&D schemes would merge in April 2024 was met by mixed views from businesses. New guidance from HMRC since has provided some clarity on how the new rules will work but careful judgement will still be needed in a number of areas.  

“While this is welcome progress, there is much that can be considered to be improved upon. The Chancellor could consider a similar relief to the R&D Expenditure Credit (RDEC) for R&D and scale up capital expenditure or potentially include these costs within RDEC. This would help scaling businesses who are facing funding challenges through the scale up process. Another area of focus for the Chancellor could be improvements to the Patent Box, by widening this out to more IP to include software protected by copyright, such as is seen overseas. This could help to bring into scope more emerging technologies such as AI.”