Spring statement ‘champions job and wealth creators’

The UK government’s Spring Statement looks towards boosting jobs and wealth creators, which has been welcomed by business chiefs.

Phillip Hammond
Business chiefs have welcomed the emphasis on innovation, infrastructure and productivity in the UK government’s Spring Statement.

Austerity policies to be examined this year

No new tax or spending commitments were unveiled by Chancellor of the Exchequer Philip Hammond, although he hinted the improving economic picture could result in a relaxation of austerity policies in the autumn Budget.He revealed the UK’s GDP growth this year would be 1.5 per cent, slightly up on previous forecasts; that government borrowing would be £45.2 billion this year, £4.7 billion lower than forecast in November; and that inflation would get down to the target of two per cent over the year and would be overtaken by wage growth during the coming months. “Our economy will remain and open and outward-looking, confident to compete with the best in the world. We choose to champion those who create the jobs and the wealth on which our prosperity and our public services both depend, not to demonise them,” said Mr Hammond.The chancellor also announced an initiative aimed at enabling less productive businesses to learn from the most productive; to tackle the problems of late payments; and to invite cities across England to bid for a share of an £840 million fund to deliver local transport priorities.

UK housing and education infrastructure

On housing, Mr Hammond said the government was working with 44 authorities bidding for a share of the £4.1 billion housing infrastructure fund; had struck a deal with the West Midlands to deliver 215,000 homes by 2030-31, facilitated by a £100 million grant from the land remediation fund; and revealed London would receive an additional £1.7 billion to deliver 26,000 affordable homes by 2020-21.Mr Hammond also said the Department for Education would release up to £80 million to help small businesses cope with the apprenticeship levy and announced an overhaul of the business rates system. Additionally, allocations of the £190 million will be made to improve high-speed broadband connectivity, with a further £25 million for the first 5G test-beds.
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Working in a modern Brexit era economy

Rain Newton-Smith, chief economist at the Confederation of British Industry (CBI), said, “The chancellor is rightly backing British business to secure the UK’s future prosperity in a new economy. It’s great to see an upgrade in the state of our public finances and rightly sensible to set more aside for a rainy day with Brexit uncertainty still weighing on the economy.“The global economy is going from strength-to-strength, but at the same time economic growth here at home remains lukewarm. This underlines just how vital it is to secure a Brexit that delivers for jobs and an industrial strategy that helps transform UK productivity in all corners of the country.“Businesses and workers must move now to adapt their skill-sets to the modern economy. Up-skilling existing workers and preparing young people properly for the world of work is fundamental to the technology revolution.”Tej Parikh, senior economist at the Institute of Directors (IoD), said, “The chancellor was right to stick to his guns and avoid too much tinkering today. Businesses have had to deal with plenty of new costs over the last few years, including the apprenticeship levy, immigration skills charge and pensions auto-enrolment, so they will be relieved to see a no-frills statement.“This was an upbeat and pro-business speech. IoD members will be pleased to see that growth is currently beating the forecasts and the deficit is falling.“Better short-term economic figures will reassure business leaders that there is underlying resilience in the UK economy, but the chancellor was also right to point to the long-term productivity challenge.”

Committing to the industrial strategy

Stephen Phipson, chief executive of the manufacturers’ organisation EEF, said, “The chancellor confirmed a steady but not spectacular picture for the economy in the next couple of years. The absence of further tuning of tax-and-spend policies makes sense to businesses at this juncture as does the commitment to strike a balance between paying down the deficit and targeted investment spending. Specific actions on industrial strategy are what business is now looking for. “Commitments to the industrial strategy pillars of people and infrastructure demonstrates progress in key areas of skills development and digital infrastructure but this will throw down the gauntlet to other government departments to step up to the plate and deliver.“Despite this positive picture however, the outlook for growth remains on the weak side at a time when global markets are expanding. This is being clouded by the domestic uncertainty surrounding Brexit and weak consumer spending.”

Making long-term infrastructure investments

Adam Marshall, director-general of the British Chambers of Commerce (BCC), said, “Businesses will be encouraged by the chancellor’s report on the UK’s fiscal health, with lower projections for the deficit and falling national debt, as well as his full-throated defence of the market economy and the role of the private sector in delivering prosperity.“Yet as deficit and debt levels improve, the chancellor must resist calls to pour money into politically-attractive, short-term spending priorities. Any headroom the chancellor has must be used to leave a lasting mark on the UK’s infrastructure and to attract investment – particularly with the challenges and changes of Brexit ahead.“A far stronger push is needed to fund and fix the fundamentals here in the UK over the coming months, and business wants the chancellor to use his autumn Budget to double down and spend to improve digital connectivity, deliver further road and rail improvements, strengthen the UK’s energy security and build more houses. Existing plans alone are not enough.”
Relocate Magazine Winter 2017 front cover
Read more about the future of the UK industry in the Winter issue of our magazine
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