Yesterday saw George Osborne deliver a divisive budget to the House of Commons amidst frequent pines of disapproval from the opposition benches countered by cries of support from the ranks of the coalition. In his opening remarks, the Chancellor of the Exchequer laid bare the grim economic state currently facing Britain, with a deficit destined to reach 85% of GDP still some years away from a resolution.
Despite this pessimistic outlook, yesterday’s budget did deliver some news that should be well received by franchises across the country. One such announcement was that Britain would reduce its corporation tax rate to 20% in 2015, undercutting most other developed nations, in the hope that this would safeguard British competitiveness and continue to attract FDI. Businesses big and small will rejoice at having their tax burden lessened, allowing them to commit more capital for growth. Such a move has already been utilised in Ireland for several years and it is hoped that that its usage in Britain will help businesses – including franchises – to expand and begin hiring again. This will come to the delight of franchisors in the UK hoping to open new outlets and/or acquire new franchisees.
Additionally, the implementation of a new employment allowance will save a sleuth of small businesses having to pay employer national insurance further alleviating a portion of the tax base that franchisees and franchisors might fall under. Being a labour-intensive business model, franchising has huge employment potential across the plethora of industries it operates in, and so any measure that minimises employment costs will prove highly beneficial.
Other positives for franchises fall on the consumer front. Reduced taxes on products such as beer could help boost consumption, as could measures that would see certain parents able to claim back up to a fifth of child care costs by 2015, freeing up more of the household budget to go to discretionary spending. These may furnish franchises operating in all industries with more custom as the squeeze on working class families is reduced.
More specifically, the budget also outlined means to stimulate construction by facilitating Britons with a new ‘help to buy scheme’ to purchase houses. If this proves a success, it could guarantee a boon in business for a range of franchises involved in the construction industry, not to mention financial franchises with an interest in mortgages and property.