In what was described by Chancellor Phillip Hammond as being “focused on preparing and supporting the economy as we begin writing a new chapter in our country’s history”, this week’s Autumn Statement has set out a strong outlook for UK manufacturing.
Areas of focus:
Tackling the productivity gap
Currently, the UK lags behind the US and Germany by 30% in terms of productivity. Figures suggest that German workers take four days to make what a British worker makes in five. Mr Hammond believes that raising productivity is essential, and will be introducing a new £23bn national investment fund over the next five years to improve innovation and infrastructure with greater focus on research and development.
Commitment to infrastructure
In his speech, the Chancellor expressed the need to commit more investment to economic infrastructure. He revealed plans to increase spending from 0.8% to between 1-1.2% of GDP from 2020 in order to provide a backbone to the government’s industrial strategy.
In calls from the Institution of Engineering and Technology (IET) prior to plans being announced, the industry body believed that particular focus needed to be on improvements to digital communications infrastructure. The Autumn Statement reiterated this, with the government committing to invest around £1bn in creating a “world-class” framework.
Protection for start-ups
In the first few weeks of her tenure, the Prime Minister vowed to defend British companies from foreign buyers. This has now been further extended by Mr Hammond, who set his focus on the protection of start-up companies. The government will set aside £400m for venture capital funds, with the hope to unlock £1bn of finance and ultimately prevent these companies from being snapped up by larger competitors.
Boosts in automotive manufacturing
At a time where global warming is of prime focus to many countries, the Chancellor announced a new £390 million investment boost for low-emission and driverless car manufacturers. It was thought that this could be in response to the “sweetener” deal for Nissan that had been reported on in recent weeks, though the government refused to reveal whether the two were related.
Export finances
In what was described by EEF as an opportunity to “grease the wheels for business in growing markets abroad”, the government will be doubling UK export finance capacity. Mr Hammond is keen to prevent eligible exporting opportunities from British businesses collapsing due to issues with finance or insurance.
Following the Chancellor’s speech, Terry Scuoler, Chief Executive of EEF, commented: “Business was looking for reassurance from the Chancellor at a time of considerable uncertainty and he has helped calm nerves with the right level of pre-Brexit tonic.
The boost to science and innovation is vital if we are to be at the forefront of the fourth industrial revolution. From now on this should be the direction of travel for future statements and policy decisions.”
In comments regarding the boost to innovation, Chief Economist, Lee Hopley said: “Manufacturers are aiming for growth and innovation is their first strategy to achieving it. The Chancellor made a significant commitment to support innovation over the rest of this parliament, by committing to review the scope and extent of the R&D tax credit and ramping up spending on innovation support. Through this inevitable period of uncertainty, this is the right strategy to ensure that UK businesses will continue to innovate, and to do so in the UK.”
The Autumn Statement certainly made a big step in supporting manufacturers’ priorities with a clear industrial strategy, but only time will tell if this can help to place ‘Made in Britain’ as a top destination.