To ask the Chancellor of the Exchequer, with reference to the Budget 2018, what assessment he has made of the effect on business investment of the annual investment allowance being raised for a fixed duration of two years.
As announced at Budget, the Annual Investment Allowance level will be increased fivefold to £1m for two years, taking effect from 1 January 2019. This measure is designed to temporarily stimulate business investment in the economy by providing an increased incentive for businesses to invest in plant or machinery. The impact on business investment has been considered within the wider package of capital allowances measures announced on the Budget day.
Taken together these measures are expected to increase the level of business investment by 0.4 per cent by the end of the forecast period, as explained by the Office for Budget Responsibility on page 50 of their latest Economic and fiscal outlook: https://cdn.obr.uk/EFO_October-2018.pdf.