UK Budget aimed at 'an age of optimism'

A £150 billion boost in UK government spending over the next three years was unveiled by Chancellor of the Exchequer, Rishi Sunak, as he delivered his autumn Budget to parliament on Wednesday afternoon.

Maginifying glass over Big Ben on 20 pound note
The Chancellor told MPs that the fiscal measures would be the foundation of "an economy fit for a new age of optimism – where the only limit to our potential is the effort we are prepared to put in and the sacrifices we are prepared to make."Mr Sunak conceded that, in the wake of the pandemic, there remained "challenging" times ahead with inflation expected to average 4% over the coming year and with pressures on supply chains likely to take months to ease.However, he pointed to forecasts from the Office for Budget Responsibility suggesting the economy would return to pre-pandemic levels at the turn of the year and that GDP was expected to hit 6% in 2022.
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New visa system

Referring to new, post-Brexit immigration policies, he said the new Scale-Up Visa system would make it quicker and easier for expanding businesses to bring in the foreign talent they needed.The visa would, he said, help "identify, attract and relocate the best global talent in key science and tech sectors" and was "all part of our plan to make our visa system for international talent the most competitive in the world".

Business grants and talent networks

Additionally, as part of a package of grants worth £1.4 billion for business research, a "talent network scheme" would be established to attract overseas talent to the UK, through "innovation hotspots" initially based in Bengaluru in India, and in San Francisco and Boston.Grants will also be awarded to "internationally mobile" companies to invest in UK, including £345 million aimed at increasing resilience for future pandemics and £800 million for electric vehicle production in the North East of England and the Midlands.

Regional investment

Regional cities in England are also to get £6.9 billion to spend on rail, tram, bus and cycle projects, including £1.07 billion for Greater Manchester, £1.05 billion for the West Midlands and £830 million for West Yorkshire.However, only £1.5 billion of the regional spending announced in the Budget represented new money, as much of it was promised two years ago.

Health spending increases

Mr Sunak also announced more cash will go to the National Health Service, including £5.9 billion to tackle the backlog of people awaiting treatment because of the pandemic, and £5 billion going to R&D over the next three years.While health organisations have welcomed the announcements, they point out the extra cash will not solve the pressing problem of staff shortages, which hit almost 94,000 full-time equivalent vacancies over the summer.

Pay boosts

Mr Sunak also revealed the minimum wage for those aged 23 and over would rise from £8.91 per hour to £9.50 from next April, and would be lifting a pay freeze imposed on millions of public sector workers last year as a result of the pandemic.There will also be £11.5 billion to build up to 180,000 affordable homes, while the retail, hospitality leisure sectors – some of the hardest hit by Covid-19 – will enjoy a year-long, 50% discount in business rates.

Reaction to the autumn Budget

Reacting to the Budget announcements, Tony Danker, the Director-General of the UK's biggest business organisation, the Confederation of British Industry (CBI), said that while many of the measures were business friendly, they would not deliver the high investment and increased productivity that the nation needed.“The Chancellor has shown a genuine willingness to listen to business with measures that will get firms innovating and help the economy to grow. It takes several positive steps forward, but isn’t bold enough to deliver the high investment, high productivity economy the government seeks," he said.On business rates, he said Mr Sunak "made real strides" towards making the system more palatable for businesses, who had been calling for more frequent valuations, wider reliefs and improvements in the incentives for firms to decarbonise."But," he added, "the hard truth is that wholesale reform to unlock investment was rejected today. The Government missed the opportunity to truly reform a business rates system that diminishes Britain’s high streets and factories.“The government’s commitment to innovation will be a central cog to the UK’s prospects to leading in the industries of the future. This will be essential to be globally competitive, so the government must stick to these targets in the coming years.“This Budget alone won’t seize the moment and transform the UK economy for a post-Brexit post-Covid world. Businesses remain in a high-tax, low-productivity economy with concerns about inflation. But the Budget will have a positive impact across the economy and makes several changes that will be welcomed by UK businesses.”

Read more news and views from David Sapsted

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