One year on, what impact has the Chancellor's vision had on Britain's homebuyers and SMEs? At the advent of last year's Budget, the UK economy faced a bleak outlook, still struggling to shake off the after-effects of the financial crisis. Caution from the financial sector against lending to smaller businesses meant many promising businesses lacked the resources required to grow, holding back hopes of a recovery.
Homebuyers faced a similar issue, with many creditworthy individuals unable to obtain a mortgage to re-fuel housing market activity. The Budget 2013 looked to tackle these persistent issues, through a number of policies designed to support deserving SMEs and homebuyers. Primarily, through the Help to Buy scheme, the government pledged to put £3.5 billion towards guaranteeing up to 20 per cent of mortgage lending to homebuyers, initially limited to first-time buyers and new build properties.
This initiative has had a noticeable effect on housing market activity, with the number of first-time buyers taking out mortgages rising 38 per cent in the twelve months to January, according to the latest report from the Council of Mortgage Lenders. Consequently, deflated house prices have regained ground, with average UK house prices recently surpassing the £250,000 landmark for the first time.
The outlook has also improved for the nation's small business community, with the Federation of Small Business' Voice of Small Business Index showing SME confidence rose to its highest level in Q1 since the index was launched in 2010. This upward trend also looks set to continue, with 62.3 per cent of SMEs expecting growth in 2014 and 25 per cent planning to increase capital investment.
In particular, after years of decline, Britain's manufacturing sector shows signs of entering something of a renaissance, thanks in part to an allocation of £1.6 billion towards industrial strategy in the 2013 Budget.
In fact, 1 in 6 firms even report they have re-shored elements of production back to the UK in the last twelve months, creating new jobs within the UK manufacturing sector. Despite this progress, lending to small businesses remains somewhat muted, with both MPs and support bodies pointing to the need to increase competition in the banking sector and encourage SMEs to consider alternative sources of finance.
Aldermore will be hosting a live Twitter panel during the Budget 2014 tomorrow as the Chancellor outlines plans to address these remaining issues, and is inviting homeowners, savers and SMEs to share their reactions live using the hashtag #BudgetPanel.
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