Alongside the Chancellor's Autumn Statement on Wednesday the OBR's report into the public finances revealed a startling fact; that as a result of the financial crisis our economy shrunk by 6.3% in 2008-09.
It's against this backdrop, of the biggest economic shock to hit our economy since the second world war, that we begun our rescue mission on the economy. Since then we've seen further challenges to global growth that no forecaster predicted. Problems in the Eurozone, an impending fiscal cliff in the US and slowing growth in China. Given this it should be no surprise that the OBR has had to downgrade their growth forecasts from those made when the challenge was considered smaller and before these global problems reared their head.
Yet despite these downgrades we will still be growing at a faster rate than France or Germany. Lest we forget the economy has created 1.2 million new jobs since 2010, new businesses starts are at an all time high and business investment is at 7% since the trough of the recession. As the Chancellor said the road is hard but we're making progress and the economy is clearly rebalancing.
That rebalancing is important. A return to on trend growth will only come through an increase in the private sector which is why I welcome the Chancellor's announcements today to help boost British business.
We have always said that we want a competitive business tax regime that can compete with the rest of the world and that's why this government had already cut corporation tax from 28% to 24%. But today the Chancellor has gone even further announcing that rather than falling to 22% in 2014 corporation tax will now be just 21%. This is lower than any other major Western economy.
As the former Chief Executive of YouGov I have run an international business and made investment decisions, so I know how important corporation tax rates are when investing in new markets. This new lower rate is an important signal to any international businesses looking for a base for their European operations. It lays out clearly that unlike our competitors across the channel, where corporation tax is 40% or in Germany where corporation tax stands at 29%, Britain is open for business. We are a country that wants to attract the best businesses and corporations the world has to offer and are not afraid to say so.
But it isn't just the biggest businesses that today's statement has helped it has also helped our vital SME sector.
Already this government has cut corporation tax for SMEs to just 20%, but in doing so a compromise had to be made. That compromise saw capital investment allowances reduced, providing businesses of all sizes, but particularly SMEs with less incentives to spend the £750bn of cash sat on their collective balance sheets.
I was lobbied by many growing businesses in my own constituency that an increase in these allowances would help them grow and am delighted that today the Chancellor has increased them by tenfold. As a result 99% of British Businesses will see their total annual investment brought into the capital allowances cap. This is fantastic news and should help drive a private sector stimulus as businesses of all sizes begin to spend their cash hordes.
Of course not every business is sat on a cash mountain which is why I also welcome the extra £1bn of capital for the new Business bank. Alongside this the consultation on how shareholdings in SMEs listed on AIM can be included in ISAs is a welcome boost to the SME equity market. The equity vs. debt debate will no doubt continue to rage, but as someone who has used AIM to raise growth capital it's clear to me we should be encouraging equity investment as an alternative to bank finance and measures like this can only help.
Finally there is the issue of overseas trade. Already we are doing great things in rebalancing our exports away from the unstable Eurozone. Non-EU exports are up 25% from Q1 2008 and have doubled to emerging markets, something that UKTI have played a big part in.
As the government organisation responsible for helping british businesses export, they can sometimes come in for criticism yet globally they are seen as the one to beat. Since this government took office UKTIs new focus on outputs rather than activities are clearly working. Swept away are the measures of how many cocktail parties an overseas office has held, or how many trade delegations its arranged and in their place are more sensible measures on things like the number of deals done and the value of business won.
We are, as the Prime Minister has said in a global race and must build on the great work already being done to support British exports, particularly to emerging markets and their high growth economies. The 25% a year increase in funding for UKTI is therefore a great boost to British Business and one I wholeheartedly support.
So will this be an Autumn Statement remembered as one that was good for business?
I think it has to be; we're cutting taxes for business, incentivising investment, providing better access to finance and supporting overseas exports. This is a government committed to enterprise and this was an Autumn Statement that showed it.