Jack Semple, Secretary of EAMA (of which MTA is a member) offers some comments on recent announcements by the Government, most notably the speech given by the Chancellor Rishi Sunak when he spoke at the CBI’s annual dinner last week. He called on UK businesses to “invest more, train more, and innovate more” and said that the government’s “firm plan is to reduce and reform your taxes to encourage you to do all those things”.
The UK needs “to overcome [the UK’s] longstanding weaknesses in investment, skills, and innovation”, he said.
The problem is not the government, he said – comments here included the statements that:
- “Capital investment by UK businesses, as a percentage of GDP, is a lot lower than the OECD average. And UK employers spend just half the European average training their employees.”
- “Businesses investment in R&D, as a percentage of GDP, is less than half the OECD average.”
- “Further government action can only take us so far. We need you, the wealth creators, the entrepreneurs, the leaders,”
- “The economic situation is extremely serious. A perfect storm of global supply shocks is rolling through our economy.”
- Inflation in April rose to 9% (CPI) and is forecast by the Bank of England to peak at 10% this year.
The government’s response is to help people with the cost of living – although he warned that tackling inflation, and not allowing expectation of high inflation to take root, is essential. “At a time of severe supply restrictions, an unconstrained fiscal stimulus does risk making the problem worse,” he said.
Sunak said he was not disheartened. “I believe our most exciting companies are still to be founded. Our most talented people are still to be taught. Our best ideas are still to be discovered. Our best days lie ahead. Government alone cannot get us there,” he said.
Comment by Jack Semple: The lack of investment by British businesses has become something of an obsession for the chancellor, The Times’ chief leader writer, Simon Nixon, says in an article this week. “Britain’s poor record on R&D is despite having one of the most generous tax regimes for R&D in the world,” Nixon writes.
Sunak’s pledge to reduce and reform taxes sit uneasily with the fact that the tax burden is the highest for 70 years, with corporation tax rising by almost one-third next year. He is formally consulting on how to change capital investment incentives and seeking views on R&D and training incentives.
We welcome comment from members, in confidence, which will be helpful in discussing policy with government – please send any thoughts or comments to Jack Semple (email: [email protected]) and if you could copy them to MTA (email: [email protected]) that would be helpful.