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<p>As well as addressing the immediate challenges of COVID-19, the Government recognises
the importance of acting now to create the conditions for an investment-led recovery
driven by private sector growth.</p><p> </p><p>Stimulating private sector investment
will create jobs, drive innovation, and revitalise local areas and regions across
the UK. This is central to the Government’s plan to secure a strong recovery and the
Budget announced a package of measures to achieve this, including the new super-deduction
to support business investment.</p><p> </p><p>The Office for National Statistics,
as part of the Quarterly National Accounts, published revised outturn figures for
business investment in Q1 2021. In real and seasonally-adjusted terms, business investment
fell by 10.7 per cent (£5.4 billion) in Q1 2021 compared to the previous quarter,
or by 16.9 per cent (£9.2 billion) compared to Q1 2020.</p><p>At Spring Budget 2021,
the Office for Budget Responsibility (OBR), which produces forecasts on the economy
and public finances, revised upwardly the medium-term business investment outlook,
expecting a return to its pre-crisis level in Q2 2022.</p><p> </p><p>In the March
2021 Economic and Fiscal Outlook, the OBR highlighted the potential impact of the
super deduction:</p><p> </p><p>“As a temporary measure, it provides companies with
a very strong incentive to bring forward investment from future periods to take advantage
of the temporarily much more generous allowances. We assume that at its peak in 2022-23,
this will raise the level of business investment by around 10 per cent (equivalent
to around £20 billion a year) as spending is brought forward.”</p>
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