Brexit clouding new spending plans, say businesses

Chancellor of the Exchequer Sajid Javid's declaration that the UK had "turned the page on austerity" as he set out plans for £13.8 billion of extra spending has received a lukewarm welcome from business groups.

The rooftops of the iconic neo-Gothic Houses of Parliament buildings in London England
While business leaders have applauded plans for investment in areas including education, infrastructure, health and law enforcement, the ever-present spectre of Brexit - particularly a no-deal one - is tempering their enthusiasm.

Confederation of British Industry: strengthen local economies with extra funding

Rain Newton-Smith, Chief Economist at the Confederation of British Industry (CBI), said, "Businesses will be heartened to see the government’s ambition to overcome regional inequalities and revitalise our education system."Our members know that skills underpin opportunity and growth. Firms called for the government to increase spending on schools and further education colleges, and are pleased the Chancellor has rightly invested in 3-18 year-old education. This will help people succeed in and prepare for the workplace of the future."The United Kingdom’s stop-start infrastructure development is holding back our growth. Strengthening local economies with extra funding will help meet the challenge of making all regions of the country vibrant places to work, live and invest in. But the sooner ambition can be turned to action, the faster firms can get on with sharing prosperity across the country."The UK is home to some of the world’s most highly-prized and sought-after products and services. We welcome the Chancellor’s boost to our international trade network to support our world-class exporters."Firms will welcome the Chancellor’s warm words on the UK’s transition to a net-zero economy but will want to see significantly more detail in the forthcoming infrastructure review."But let’s be clear – in the event of a 'No Deal', the damage to our economy means this ambition will count for nothing, and the country will be stuck in a swamp of uncertainty.”

British Chambers of Commerce: bold measures are needed to boost business confidence and stimulate growth

Suren Thiru, head of economics at the British Chambers of Commerce, commented, "There were encouraging words from the Chancellor on infrastructure and a welcome boost for further education. But, despite the big headline figures, this Spending Review was limited in scope and detail, highlighting that the ongoing Brexit impasse continues to frustrate much-needed Westminster action on the domestic business environment."If the economy continues to slow as many expect, the government’s ability to meet its spending commitments will be limited. While the immediate focus should be on avoiding a messy and disorderly Brexit, bold measures are needed to boost business confidence and stimulate growth – which are critical for businesses to generate the wealth to underpin the tax revenue needed to meet these spending promises."
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Institute of Directors: companies want longer-term outlines to inform investment plans

Tej Parikh, Chief Economist at the Institute of Directors (IoD), said, "The spending round saw the Chancellor turn on the taps, but the under-pressure business community still needs more direct support."With the elongated period of parliamentary turbulence sapping economic confidence and depressing investment plans, business leaders needed a significant shot in the arm to build their resilience. Funding for education will get high marks from directors, and there are positive signs that the government wants to get to grips with our lagging regional growth and infrastructure."Unfortunately, many firms may still be left wanting an emergency Budget soon, whatever happens with Brexit. One-off reliefs to business rates would support margins in a challenging period, and a moratorium on the implementation of potentially disruptive regulations would help cut down business to-do lists and get directors focusing on adjusting to Brexit and investing in their firms."Earmarking departmental spending is a vital exercise, but firms would much rather see longer-term outlines to inform their own investment plans. The accelerated process also afforded little space for businesses to feed in their priorities. Meanwhile, there is concern that, without official forecasts alongside, the money allocated may eat into future funding."

Institute of Directors: companies are in desperate need of more tangible guidance and financial support

On the announcement of £2 billion extra funding for Brexit preparations, Allie Renison, IoD head of Europe and trade policy, said, "Despite the turmoil in parliament, extra funding for Brexit preparations is still very much a necessary precaution. It is for politicians to wrangle over whether no deal is preventable or not, but businesses cannot look at this through rose-tinted lenses."While departmental spending is clearly allocated for this, we are disappointed there is still no full detail even on the business readiness funding portion of the £2 billion announced by the Chancellor more than a month ago."Firms are in desperate need of further tangible guidance and financial support to properly plan for every outcome. In Northern Ireland in particular, companies trading across the land border have precious little detail from either government or the EU to work with and many cannot afford to relocate even as a contingency. Without devolved government in place, the Northern Ireland Office and civil servants in Stormont are also in serious need of resource to improve Brexit planning and adjustment – not least to support industry through the changes that may be upon us."Unlike politicians, business cannot just wish away the possibility of no deal, it is a real and present risk that requires more information and assistance from the government beyond just advertising spend."

For more news and views on the issues surrounding Brexit, visit our dedicated Brexit section. 

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