Businesses in Australia will benefit from the latest Federal Budget, following several positive announcements handed down overnight, according to the Commonwealth Bank of Australia (ASX: CBA).

With the Budget now delivered, Chief Economist Michael Blythe pointed to the impact on productivity as a result of new policy measures designed to lift labour force participation.

“New policy measures announced have a heavy labour force focus and the associated boosts to skills will help ease pressures as the labour market tightens,” said Mr Blythe.

“Measures focusing on increasing skilled migration, educating the workforce, improving the welfare-to- work trade-off and boosting infrastructure are all positives for the longer-run economic picture.”

According to Commonwealth Bank Economist, James McIntyre, the Budget has also delivered some good news for small businesses in particular.

“The extension of the asset write-off to motor vehicles is supportive of investment, particularly for small businesses seeking to upgrade their vehicles in order to adapt to rising petrol prices,” said Mr McIntyre.

“The early cut to the company tax rate for small businesses which has been announced is also a big boost to investment, jobs and cash flow.

Additionally, the sector has benefited from a cash flow measure that the Government announced through a change to Pay As You Go tax instalments. This will deliver an extra $700 million into cash flow for small businesses which will again help them to deal with some of the pressures the sector is facing in the ‘patchwork’ economy.”

While the news was broadly positive for the small business sector, Mr McIntyre added that the key issue for businesses and homeowners is whether the Budget has done enough to take the pressure off interest rates.

“The mining boom being driven by the rise of China and India is a big external shock to Australia’s economy, which will deliver a lot of income and a massive investment spend. That spending is what we believe will drive the RBA to raise interest rates another two times by the end of the year,” he said.