The UK must ‘seize the opportunities’ from Brexit while tackling deep-seated economic challenges ‘head on, chancellor of the exchequer, Philip Hammond, is expected to say in todays Autumn Budget announcement. In his Commons speech, which will begin at about 12:30 GMT, Mr Hammond will set out the proposed tax and spending changes for the UK, whilst analysing the current state of the economy, future growth projections and the health of public finances.
The chancellor is expected to promise investment to make Britain ‘fit for the future’ as an ‘outward looking, free-trading nation’ once it leaves the EU in 2019, with a commitment to supporting hard-pressed families with the cost of living and address housing shortages.
In the run up to the announcement, small businesses are speaking out to what needs to be done to support the SME economy.
Striking a balance
Adam Chester, head of economics, Lloyds Bank Commercial Banking, says, ‘This week’s budget will have to strike a difficult balance. Improvements to the public finances had given some room to ease policy, but that will be squeezed when the Office for Budget Responsibility revises down its growth forecasts on Wednesday.
‘The commitment to reducing the so-called structural budget deficit to below two per cent of national income by 2020-21, gives us a framework to assess how much room there is for any giveaways. At the March Budget, the structural deficit was forecast to undershoot the two per cent target by £26 billion. It’s now set to fall £6-8 billion short of the March forecast, mainly due to stronger-than-expected tax receipts. However, the OBR warned it will dial down its productivity forecasts, and we estimate a 0.4 per cent downward revision would increase the structural budget deficit by around £15-£20 billion.
‘On top of this, new funds are being sought for areas including Northern Ireland, public sector pay and the NHS, which would likely mean breaching the two per cent cap. However, we suspect any available wiggle room would be used to fund a modest fiscal giveaway in order to keep borrowing and debt projections on track.’
Skills shortage
Jonathan Richards, CEO at breatheHR, comments, ’The government keeps repeating the mantra that Britain is ‘open for business’, so in his bold Budget, Phillip Hammond has to show this is the case. Whitehall has big ambitions for the UK to become an economic force on the world stage according to their recent industrial strategy announcement. But its got to ensure the foundations are in place. Rather than focus on headlines about an industrial utopia, it needs to make gains on providing assurances as businesses hate uncertainty.
‘The government mustn’t be side-tracked by Brexit and follow through with their manifesto promises. For instance, Hammond needs to tackle the skills shortage plaguing SMEs by investing in schools and higher education to supply the next generation with the digital skills needed, especially as we embark on the ‘fourth industrial revolution’.
‘Whitehall should also support those at risk of losing jobs to automation by incentivising businesses to upskill employees. Every business owner I talk to tells me the skills gap is their number one concern, especially as we prepare to leave the EU. In fact, we know first-hand the struggles of finding talent with the right skills; in the end, we had to hire someone who showed potential and train them up ourselves. This took extra time and resources – a luxury not all startups have.’
Tech investment
Simon Blunn, managing director and country manager UK&I, Qlik, says, ‘We welcome the government’s proposals to accelerate investment in advanced technology and digital skills as part of tomorrow’s expected budget announcements. However, as always with these types of announcements, the devil will come in the detail. In particular, we’re keen to understand which skills will be prioritised and nurtured (and at what level) to support and deliver on these projects.
‘Just as widespread literacy emerged during the onset of the industrial revolution, a new form of literacy – data literacy – for a digital, automated and robot existing world needs to evolve. This will be vital as the UK looks to become the leading nation in AI. While we need a workforce that can build, programme and secure AI technologies and robots, we also need a wider workforce that has the ability to interpret, derive meaningful insight and reason with machines, AI, and the vast amounts of data they produce.
‘Yet, at present, only 21 per cent of people in the UK feel confident in their skills to be classed as “data literate”. What perhaps gives us an even greater warning is the fact that graduate level employees have an even lower level of data literacy at 18 per cent, highlighting that the education is not currently there to prepare the next generation for the future of work. Just last month, Imperial College London stressed the importance of ensuring that every student leaves education data-literate in its response to a call for evidence from the House of Lords’ Select Committee on AI.
‘Data fuels productivity – something the UK needs as we grapple with uncertainty following Brexit. If this issue of data illiteracy does not improve then we risk creating a two-tiered workforce – those that can keep up with new technologies and ways of working, and those that can’t. While this responsibility to upskill falls on everyone’s shoulders, as the Fourth Industrial Revolution picks up pace we’re also looking to government to help close the gap.’
Insurance tax
Freddy Macnamara, CEO and founder of pay-as-you-go insurer Cuvva, says, ‘If the chancellor decides to hike Insurance Premium Tax up to 20 per cent on Wednesday, as many expect, the cost will inevitably be passed onto drivers. IPT has already jumped from six per cent to 12 per cent in the last 18 months and this is one of the reasons why car insurance premiums have risen five times faster than inflation in the last year alone.
‘These rising costs are making driving completely unaffordable for many people, and it is undoubtedly contributing to plummeting car sales. A more dangerous consequence is more uninsured drivers on the road.
‘In the last year we’ve seen the number of incidents involving uninsured drivers rise for the first time in a decade and it’s no coincidence that this follows huge increases to annual premiums. A further hike to IPT is likely to exasperate this, while putting a serious financial strain on anyone with low-to medium salaries, especially those living in London, where premiums are higher than they are anywhere else in the UK.’
Bitcoin
Nicholas Gregory, founder and CEO of CommerceBlock, says, ‘Throughout history, countries have ended up playing catch up because they have neglected nascent technology industries for too long. It would be inexcusable for this to happen to Britain with Bitcoin, all the more so given that Brexit has placed even more pressure on the need for the country to innovate.
‘The greatest dividend from the use of blockchain technology won’t just be in the way ordinary people pay for things, it will be in the way it collapses the cost of so many everyday business processes.
‘Bitcoin and other cryptocurrencies are no longer an experiment but are having a real-world impact every day. If the Chancellor doesn’t use the Budget to insist politicians and regulators take a constructive interest in cryptocurrency and clarify their tax status, then that’s a disaster for Britain and we will all lose out.’
Further reading on Autumn Budget 2017
