Increased incentives for businesses to be more environmentally friendly, as announced in the 2007 Budget, will reportedly help the South West of England Regional Development Agency (RDA) play a greater role in tackling climate change.

The Chancellor Gordon Brown said that money for RDAs and Business Links to offer advice, support and incentives to small businesses to become more energy efficient would rise from £140m to £240m.

The South West RDA has also been encouraged by the Chancellor’s announcement of tax allowances for research and development, particularly in medical and environmental research, as this is one of the region’s strengths.

Nigel Jump, RDA’s chief economist, said: “The Chancellor’s extra investment to help us encourage businesses to make green investments enables us to continue the work we have been doing for some time with SMEs in tackling climate change.

“Assuming the EU agrees, measures such as lower VAT on some environmentally-friendly products will contribute towards the region meeting its targets to cut carbon emissions.

“We also welcome the fact that Government seems to have accepted our input in terms of strengthening links with business and investment and ensuring regional strategies are consistent with one another.”

Mr Jump continued: “Businesses across South West England will welcome the lower corporate tax rates and the investment in skills training grants. Gordon Brown has recognised that higher investment in education and science will pay dividends in terms of greater productivity.

“It will not be until the autumn however when the Comprehensive Spending Review is published, that we will see how total government spending will affect economic growth in South West England. It could well be a dampening factor for the region’s economic growth in the period 2008-2011.”

Commenting generally on the state of the UK economy Mr Jump said: “The Budget emphasised the long period of economic expansion that the UK has enjoyed since 1993, improving the country’s relative macro-economic performance compared with other major economies.

“Against this background, Mr Brown has forecast continued growth of around the underlying rate for the economy for the next two years (2.5-3.0 per cent in 2008 and 2009) and he therefore predicts that inflation will revert to the 2 per cent per annum target rate. Given this and a fairly neutral budget for the overall budget balances, the Treasury believes it will meet its fiscal rules going forward.”

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