The Autumn Budget and growth
Date published:
By Rachel Anderson, assistant director, policy
Autumn is here, and stranger sounds than usual are emanating from Whitehall. It is a sort of muffled rummaging and rattling as the Chancellor looks down the back of government sofas and empties the spare change jar on the bathroom windowsill that Gordon Brown put there in the 1990s for a “rainy day”. The Chancellor faces some tough choices and is wrestling with a large deficit and sluggish growth, not the fiscal year she would have hoped for.
Everyone has an opinion on what Rachel Reeves should do. Everyone wants their corner of the economy protected, and so many sentences start, “But it’s only a few thousand, million or billion, it will not make much difference…” But the Chancellor will have some tough choices to make in November and, well, the Chamber might as well put its twopenneth (adjusted for inflation) in. So, these are our asks:
First, for businesses, the last Budget was a humdinger, with significant rises in employers’ NI and other costs. It will be difficult to take more. So, loudly and with conviction, our ask is that there are no new tax burdens on business and a commitment for the next two years at least to give certainty.
Secondly, we get it, Chancellors feel the need to emphasise and re-emphasise their commitment to fiscal probity. However, when growth is sluggish, there needs to be some flexibility. We agree with the Chancellor’s commitment to borrow only to invest and to close the gap in UK finances, but doing so over a short period of time may be counterproductive. So, we would like to see fiscal flexibility and investment made in the regions through devolution.
Skills are always a high priority for employers, and there is a willingness to invest. Mechanisms such as the Apprenticeship Levy do channel funds into the skills system, but it is not perfect and needs reform to allow more employers to pool their funds and use them better to support the region.
Finally, something that has taken a back seat in recent Budgets is international trade. Brexit and the pandemic took the focus away from something that is a North East strength. We are still a great manufacturing and exporting region, and we can do so much more with support. Support the North East to capitalise on the new trade deals the government has done. It is not just about finance; it is also about digital training and real support for SMEs to take their first steps into export.
November feels like a crossroads. Get it right and that elusive growth will come, and let us hope the Chancellor takes the right path.