The financial crisis is often said to have started with the collapse of US Investment Bank Bear Stearns on March 17th 2008. To be in a position, one day short of eight years later, to be able to deliver one of the least momentous budgets of living memory may rank as a definite achievement. There were no crisis to deal with and few eye catching measures. When a tax on sugary drinks is commanding the headlines you know there hasn’t been much that needed to be washed down with something stronger. This wasn’t one which will linger long in the memory, although for a Chancellor still scarred by the Omnishambles that’s no bad thing. [NB in the 24 hours since writing cuts to disability benefits have started to attract unwelcome attention on the Government’s back benches…]
That’s not to say that there was nothing in the Budget. The reform of Business Rates will be welcome to the smallest businesses, in particular independent shops. An extra penny of the rate of Corporation Tax, albeit not for a few years, is welcome more widely. On personal taxation there were significant changes to Income Tax thresholds and Capital Gains Tax. A mooted pensions raid was averted for fear of upsetting middle England in the run up to the referendum.
But overall this was package which was limited in its size scope and ambition. Not surprisingly perhaps given that it was the third in just over a year, with an extra budget squeezed in after the General Election to give a newly wholly Conservative Government its head. Further cuts were signalled then, the most opportune moment for them by a Government in the afterglow of victory. Much of that afterglow has worn off along with most of the economic optimism of last year. The Office of Budget Responsibility has had to downgrade its forecast meaning that it will be even harder for the Chancellor to hit his targets and conform to his rules.
Although global economic headwinds are to blame for most of those difficulties at the root of a lot of the underperformance has been the UK’s disappointing productivity numbers. In manufacturing, the best way to address productivity is to invest in technology (alongside investing in skills). The potential that exists in emerging technologies at the present makes that even more true than usual. From digitisation to new materials, manufacturing is undergoing a period of profound change. MACH 2016 next month is well timed therefore as an opportunity to identify technologies to pursue and make decisions that will stand companies in good stead for future growth.