UOB: Help likely in Budget for struggling firms, families

It will be one to watch given the multiple constraints Govt is facing

IT MAY not be a hongbao Budget this year but United Overseas Bank (UOB) believes there will be help for both companies and individuals struggling with economic restructuring.

This will include one-off cash grants to help offset rising costs for companies and financial help for low-income families and individuals, said UOB economist Francis Tan.

Apart from helping families and companies, Mr Tan said the Budget will be one to watch given the multiple constraints the Government is facing.

"How do we operate in a world where growth is more moderate, and internal constraints - both labour and infrastructure - are forcing the government to recalibrate its current growth policies?" he said.

"At the same time, we have a widening income gap, as a result of global changes. And, global liquidity is forcing up asset prices, including property prices and rental costs."

Mr Tan expects the Government to continue its focus on giving cash directly to low-income families and the elderly through the GST Voucher scheme established last year.

Businesses can expect a one-off cash grant, probably capped at a small percentage of their revenues, or up to $5,000.

He also expects social spending to increase steadily over the next few years, as policymakers look at forging inclusive growth.

Special transfers to families and companies in the form of subsidies or direct cash grants will hit $9.5 billion next year, Mr Tan estimated.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, who will deliver the Budget on Feb 25, is expected to tackle the issue of economic restructuring.

He said previously that the Budget will tackle key areas such as the manpower crunch and providing help for low-income families.