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Scrutinising the Autumn Statement



Against the backdrop of Brexit, today’s Autumn Statement was much anticipated. Ahead of its announcement, the predicted impact of the EU Referendum result, “JAMs” - those “just about managing”- and infrastructure were all hot topics.

So, what did Philip Hammond actually cover and were there any surprises?

As expected, there were no grand giveaways, but a clearer picture of the nation’s economic future was painted. With borrowing up, growth down and a £122bn black hole caused by Brexit, the Chancellor’s statement focused on the long-term future of the UK, its economic interests and, crucially in a post-referendum world, how the Government plans to keep Britain as the “number one destination for business”.

Alongside its renewed pledges to cut corporation tax, productivity and infrastructure were cornerstones of the Chancellor’s statement. To illustrate the need to invest, Hammond used the analogy that “it takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.”

With more than £1bn ringfenced for digital infrastructure and the Government also offering business rate relief on new fibre infrastructure from April 2017, small businesses and those in rural locations will benefit, making them more competitive in an increasingly globalised market.

While the £1.1bn extra investment in local transport networks is a positive step, it actually only represents 0.08% of GDP and still leaves us lagging behind other developed nations when it comes to spending on infrastructure. If an industrial strategy is to be delivered successfully, it needs significantly more financial investment and a focus on how we address the skills shortage in the built environment sector.

One of the most important announcements came in relation to the Northern Powerhouse, so much so that it was trending on Twitter throughout the statement announcement.

£1.8bn will come from the Local Growth Fund to English regions, giving businesses outside of the capital a financial boost. The North has been allocated £556m, with the aim to improve productivity and infrastructure to support the Northern Powerhouse strategy. While the investment is positive and fits into the long-term strategy to reduce the gap between London and northern cities, it’s important to note that infrastructure investment remains low as a percentage of GDP.

There was good news for the construction industry, with a pledge to invest a further £1.4bn to deliver 40,000 additional affordable homes and a £2.3bn Housing Infrastructure Fund, which aims to unlock land over the coming years. With more and more people struggling to get on to the housing ladder, this has been welcomed by many, while also giving a boost to businesses operating in the housing sector.

So, what is the verdict overall?

For business, there are some real positives, particularly from an investment and innovation point of view. Boosting productivity and improving infrastructure could help to protect the UK’s long-term growth ambitions and, crucially, raise the standard of living for millions.

However, at the same time, the skills shortage in the construction sector remains and needs addressing urgently, while pressure on public services could ultimately undo any of proactive, business-centric policies. With two thirds of NHS trusts reporting deficits, the Government cannot ignore the failing health of our health service for much longer.

It will take time to see the results from this latest round of announcements, particularly those around infrastructure, but one thing is for sure, there will be some bumps in the road to economic recovery.

 

Tagged with: Autumn Statement, Brexit, Built Environment, Construction, Housebuilding, Infrastructure, opinion, Politics, Productivity