The Autumn Statement was heavily focused towards fiscal stimulus by way of infrastructure spending and the government announced its flagship national productivity investment fund, which will focus on innovation and infrastructure in the four areas of housing, transport, digital communications and development.
One of Theresa May’s early decisions as prime minister was to create a new department with specific responsibility for developing a new industrial strategy. This was welcome news to the manufacturing sector. Manufacturing is still often seen as a poor relation to the service sector when considering the UK economy as a whole; industrial production output is still below its pre-recession levels. It is hoped that a clear commitment to an industrial strategy will create a change of mindset and confidence about the sector.
The government’s infrastructure spending plans are set to run for the life of the parliament and will be funded by additional borrowing.
Whilst all major infrastructure projects have a positive impact of the supply chain, manufacturers will be particularly heartened that the government is making new money available for research and development, with an additional £2bn per year commitment for the life of this parliament. Specific additional funding for extending and enhancing the Biomedical Catalyst were also confirmed.
No details were mentioned, however the government also stated that it plans to review the R&D tax credits systems, particularly the recently improved expenditure credit scheme for large companies. The UK’s R&D tax credits are seen as generous and effective, but no doubt improvements could be made.
Overall, changes to the business tax environment were few, with the chancellor keeping much unchanged. This is will welcome news for companies generally – the chancellor knows that stability should increases confidence and encourages business investment.