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Budget 2018: A Global Response

 

Jack Simpson takes a look at what the Budget means for Global Members, and our future "Global Britain".

Last week the Chancellor, Philip Hammond, announced his budget for 2019, a strategy for how Government will raise and spend its money in the coming year. With Brexit just 6 months away and the release of the recent this was a real opportunity to provide global businesses with some financial reassurance, and backing exporters who have been tasked by International Trade minster to make a global success of Britain. This was an opportunity missed.

Hammond first addressed Brexit, and announced his budget is built on the future relationship with Europe, and our future partners. £2.2bn was announced for the Brexit Ministry to get Britain Brexit ready, along with an increase of staff announced earlier this year, an extra £2bn would be going to UKEF and E-Passport at Heathrow will be expanded (to cover counties like US and Japan).

Chancellor Hammond framed this as a Brexit “double deal dividend”, but this is just a fancier way of saying we’ve had to put some billions away (estimated at £15bn) in case of No Deal. A lack of leadership and vision means we are only 6 months away from one of the biggest political changes in recent history, and we have no clear idea what will change.

Hammond states that Government would be willing to economically intervene, and a new Spring budget (after Brexit date March 29th 2019) could be issued under a No Deal. However, this is unlikely to provide much confidence for Global Members and certainly not the “Strong and Stable” leadership business was promised last year.

After all the cooing and shouting that generally accompanies the Budget, I was left a little disappointed at what was missed out.

Brexit is the cloud on the horizon, and while Government announced that it itself was getting ready (that extra £2bn) there was nothing on practical, on the ground Brexit business support. As above, Hammond said Government would intervene if necessary, but it is unclear what this will look like, and how business can access any support or relief.

Beyond this, we are yet to see any Government backing for exporters, following the publication of the Export Strategy, which set a target of making exports contribute 35% of the UK economy (currently 30%). The Strategy looks at reducing the perception of risk in starting to export and accessing new markets, however, it relies mainly on other business to tackle this.

Members have consistently told us how Government grants and incentives have been beneficial in unlocking new markets and opportunities. From help to set up face-face meetings, local research or networks and base finding, this support reassures business that the UK is baking the UK brand. While Business can certainly lead on trade promotion, sharing knowledge and skills, they shouldn’t be responsible for policy, and its financial support. The budget's failure to offer government backing for exporters will likely mean they will have to rely on their own resource to access new markets.

Finally, there was a parried effort to address Air Passenger Duty (APD). While the Chancellor announced APD will be adjusted to reflect inflation, the Chamber would like to see either the devolution of APD to the region, or its abolishment. The out dated duty has been criticised as far as Kenya, and the devolved powers of Scotland are already working on its reduction which would further hurt the competitiveness of our regional airports.

As the Brexit deal becomes clearer, we should see more fiscal backing of future trading policy and businesses, which makes it more important that Government act quickly and effectively in negotiations, but it was a disappointing budget in addressing the concerns of global traders, here and now. The Chamber encourages member's not to sit back on Government inefficiency, but to be proactive in facing Brexit, and to get ready now, follow this link for our Preparing for Brexit page.