Britain and the United States have one of the most important economic relationships in the world. We are each other’s single largest investor.
This vital relationship is well represented here in Georgia where nearly 200 British companies operate.
Not surprising then that the early steps of the U.K.’s new coalition government are attracting much interest in Georgia. Last week the coalition government announced its first budget, less than two months into office.
This sets out a five-year plan to rebuild the British economy based on responsibility, freedom and fairness.
It pays for the past. It plans for the future. It supports a strong enterprise-led recovery. It rewards work. And it protects the most vulnerable in our society.
Six billion pounds of savings have already been announced. An independent Office for Budget Responsibility has been established. This means that the power to determine the growth and fiscal forecast now resides with an independent body.
This early determined action has earned the U.K. credibility in international markets. The government is determined to reduce Britain’s large deficit in a way that strengthens and unites the country.
It’s also determined that growth will come from business and trade. Specific steps announced in the budget include:
● A bank levy, encouraging banks to move to less risky funding profiles — a move already supported by France and Germany.
● A new model of economic growth built on saving, investment and enterprise instead of debt.
● A plan to support business and enhance the U.K.’s competitiveness.
● More freedom for businesses through reduction in regulation and tax rates, whilst refocusing support toward infrastructure, the low-carbon economy and regional development.
● A change in capital gains tax for entrepreneurial business activities, which will extend the 10 percent rate from the first 2 million pounds to the first 5 million pounds of qualifying gains made over a lifetime.
The budget announcements will make Britain more competitive. The main rate of corporation tax will fall over the next four years, from 28 to 24 percent.
This will give the U.K. the lowest rate of corporation tax in the Group of Seven and fifth-lowest rate in the Group of 20 by 2014.
While the standard rate of sales tax will increase from 17.5 to 20 percent next year, the U.K. will still be below the European Union average.
Britain and Georgia have a strong and growing trade relationship in many sectors that my government is keen to foster.
The Confederation of British Industry’s Sterling Assets report, which issued this month, showed that in 2009 Georgia sold $1.2 billion in exports to the U.K. — we’re your fourth-largest export destination. And that British-owned affiliates account for 24,100 jobs in Georgia.
This week’s budget shows that the British economy is “open for business” and I look forward to us doing even more business with Georgia.
Annabelle Malins is the British consul general responsible for British interests in Georgia and the Southeast.
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