The Chancellor, Jeremy Hunt, this lunchtime (17 October) delivered a comprehensive Autumn Statement, aimed at achieving “stability, growth and protecting public services”.
Here, the IOE&IT Daily Update outlines the main points of interest for exporters and traders.
1. The recession is here
In a wide-ranging Statement, Hunt acknowledged that the UK is already in recession and highlighted that the Office for Budget Responsibility (OBR) forecast is for the UK economy to shrink 1.4% next year. The economy is then expected to grow by 1.3%, 2.6% and 2.7% in the following years.
At the same time, the OBR is expecting unemployment to rise to 3.6% next year, then again to 4.9% in 2024 before dropping back down to 4.1% in 2025. This was one motivation behind the Chancellor announcing a taskforce to look into the rising number of economically inactive people in the UK, which has shot up since the pandemic.
2. Plans to scrap tariffs
As IOE&IT director general Marco Forgione has repeatedly stressed, one way out of a recession is to boost trade. There was good news on this front, as the Chancellor announced plans to remove import tariffs on over 100 goods used by UK businesses in their production processes.
Commenting on this move, Forgione said “This shows a commitment to supporting the manufacture of products in the UK, which we particularly welcome.”
3. A re-commitment to devolution and levelling up
There was a lot in the Autumn Statement to cheer up business owners across the country, with a clear focus back on the Johnson government’s “levelling up” agenda. A commitment to maintain levels of capital spending and not cut back on infrastructure projects is welcome
There was also substantial support announced for the devolved administrations, as well new mayors for areas such as Suffolk, Norfolk and Cornwall.
The Advanced Technology Research Centre in Wales should further heighten the UK’s specialism in technological development, while in Northern Ireland a Northern Ireland Trade and Investment Event is planned for 2023 to help drive new investment there.
Leaving in place schemes such as Northern Powerhouse Rail, HS2, the A75 improvements and the gigabit broadband rollout should be good news for helping businesses in areas across the country.
4. A new type of Investment Zone
One big announcement in September’s “mini-Budget” was a list of sites for new Investment Zones across the country. While the details of that scheme have not survived, the concept of using government incentives to encourage the emergence of new technology businesses remains in place.
The Chancellor echoed many of his predecessors by calling for the UK’s excellence in innovation and ideas to be fully exploited and turned into UK-based global companies and brands. This is also tied into the levelling up agenda, with a focus on investment zones tied to universities in left-behind areas.
Forgione is keen for links between universities and businesses to be encouraged in this way.
“The change of focus regarding investment zone policy to leverage the UK’s research strengths and to work closely with universities is important, not least because harnessing these specialisms will fuel the growth of new industries and lead to further export opportunities,” he said.
5. All about energy
The E-word was probably the most used word in the Statement. This was a fiscal event effectively about energy – this recession was, said Hunt, made in Russia – and while he pledged to stick to the Energy Price Guarantee for households through the winter, the cap will increase in Spring to £3,000.
There was no detail on what support will be available for business energy bills but there was an increase in windfall tax revenues (estimated to bring in some £14bn a year), with a hike in rate from 25% to 35%, and a broadening of the scheme to also cover low-carbon electricity providers.
Hunt also pledged a long-term commitment to energy efficiency, with a new Energy Efficiency Taskforce and a promise to reduce energy demand by 15% by 2030. The Chancellor also highlighted the export opportunities of nuclear energy.
But there was mixed news for the users (and future buyers) of Electric Vehicles, with plans to scrap the Vehicle Excise Duty exemption from 2025, by which time it is expected they will account for half of all vehicles sold.
The Daily Update team will continue to gather thoughts and feedback on today’s announcements and will provide a more detailed round-up of industry responses to the Autumn Statement and the OBR’s forecasts tomorrow.
