Chancellor sees UK becoming a 'tech superpower'

The UK is “powerfully positioned” to play a leading role in the global tech and innovation industries that will "shape and define this century”, Chancellor of the Exchequer Jeremy Hunt said on Friday.

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In a speech in London, during which he put tackling inflation ahead of tax cuts for individuals, Mr Hunt said the government was determined to see the country becoming a “technology superpower”."I want the world’s tech entrepreneurs, life science innovators and green tech companies to come to the UK because it offers the best possible place to make their visions happen," he told a meeting at Bloomberg's European headquarters.

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'Focus on growth'

While he said businesses needed lower taxes to encourage investment in the country, he indicated there would not be scope for cuts in his Budget in two months' time. Instead, he said, the government's focus was on the “four Es of economic growth and prosperity - enterprise, education, employment and everywhere"."Sound money must come first but our ambition must be nothing less than to have the most competitive tax regime of any major country," Mr Hunt maintained.Although the speech was short on specific proposals to boost growth, the chancellor dismissed the "gloom" voiced about the economy by many commentators and said the government would use "Brexit freedoms" to boost the nation's growth and productivity.The UK, he claimed, was "poised to play a leading role in Europe and across the world" in the growth sectors that will define the 21st century, saying the government had a plan for "long-term prosperity based on British genius and British hard work".Mr Hunt added: "Decline-ism about Britain was wrong in the past - and it is wrong today. Some of the gloom is based on statistics that do not reflect the whole picture."Like every G7 country, our growth was slower in the years after the financial crisis than the years before it. But since 2010, the UK has grown faster than France, Japan and Italy. Since the Brexit referendum, we have grown at about the same rate as Germany."While he said the government was committed to a low tax economy but would only make the cuts "when we can". Instead, Mr Hunt said the government would seek to buoy the economy by what he described as exploiting the opportunities of Brexit.He continued: "Confidence in the future starts with honesty about the present, and we should not shy away from the biggest challenge we face which is our poor productivity. Our plan for long-term prosperity tackles that challenge head on."It is a plan necessitated, energised and made possible by Brexit, which will succeed if it becomes a catalyst for the bold choices we need to take."Our plan for growth is a plan built on the freedoms Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low carbon economy and to support democracy abroad."

Post-Brexit changes

Mr Hunt also announced that the government would reform the so-called 'Solvency II' EU directive that governs the amount of funds British insurers are required to hold in reserve.Sky News said the Treasury had pointed to an estimate by the Association of British Insurers which suggested the changes could unlock up to £100 billion of private investment into UK infrastructure and clean energy - such as nuclear power - over the coming decade.

Business reaction on Jeremy Hunt's speech

There was a mixed response from business leaders to the speech with Kitty Ussher, the Institute of Director’s chief economist, saying there was nothing in it to indicate how Prime Minister Rishi Sunak's aim to use the tax system to encourage investment would be achieved.While she welcomed Mr Hunt's commitment to a high-tech future, bringing down inflation and increasing the labour supply, Ms Ussher said business needed to see practical policies emerge.“Business needs government action to counteract the negative mood, for example through a continuation of the capital investment super-deduction, through tax credits for employers who invest in skill shortage areas and a plan to incentivise the net-zero transition for the SME sector," she said.“There is also a gap in the chancellor’s rhetoric. While of course we should seek to ensure that firms operating at the frontier of new technology can come to Britain and thrive, our future growth path also depends on the many millions of individual decisions taken by leaders of smaller businesses across all sectors whose attitude to continual improvement and investment, including the adoption of innovation undertaken elsewhere, is nevertheless crucial to our future growth path."Shevaun Haviland, director-general of the British Chambers of Commerce, said "there was very little meat on the bones of the chancellor’s vision".She added: “Crucially he missed out two Es when he detailed his focus on ‘enterprise, education, employment and everywhere’. Without addressing the issues of energy and exports, our economic growth will continue to be stunted.“While wholesale energy charges might now be starting to fall, the reality is that thousands of businesses were locked into new contracts last year at prices that will remain far higher for months to come. This will be unsustainable for many and must be addressed.“It is also very disappointing that he did not mention exports at all. Government must help businesses to harness the opportunities provided by existing free trade agreements, and those coming on stream."Tony Danker, director-general of the Confederation of British Industry (CBI), said that, after doing so much to stabilise the economy last year, Mr Hunt had "rightly now shifted gear to renew his focus" and concentrate on growth.“It’s only by improving the UK’s languishing performance on productivity that we can realise the huge economic potential in every corner of the country," Mr Danker said.“There is much to get behind here with the chancellor’s emphasis on using innovation as the foundation of the UK’s future economy and championing the strengths of the UK tech sector.“He now has a strong framework for growth. And we hope the Budget in less than two months will show strong actions to move us forward.”

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