Blake Morgan Chairman Bruce Potter comments on this afternoon’s Budget announcement.
“With huge uncertainty about how quickly the economy will recover from the COVID-19 pandemic, this Budget was always going to be a challenging one to navigate. We all know there is a day of reckoning coming, when the unparalleled spending of the last year will have to be repaid. But while the Chancellor’s rhetoric revolved around taking an honest and responsible approach to repairing the damage, there was recognition of the need to boost business confidence and extend the current support mechanisms well beyond the current lockdown roadmap to protect jobs and livelihoods.
“The Chancellor is quite rightly trying to strike a balance between the tactical decisions necessary to survive versus the strategic action needed to recover and re-focus the economy for a post-Covid world. The extension of the furlough scheme will be a huge relief and lifeline for many, and the new two-year super-deduction to give tax relief against new investments will deliver a boost to businesses. The strong emphasis today on stimulating investment – including the announcement of eight new Freeports and the ‘Help to Grow’ scheme – certainly acts to sweeten the pill of the corporation tax hike. But there’s still a question around whether businesses will be ready for this higher level of taxation, when it comes into play in 2023. Will we have recovered enough? It’s hard to say given we don’t yet fully understand the true economic impact of the pandemic and whether we’ve ‘bottomed out’ this crisis yet.”
The launch of the new National Infrastructure Bank, with £12 billion in capitalisation, was one of the bigger ticket announcements today and will be a key driver of the green industrial revolution we need.
“Through our work in Wales, we’ve seen first-hand the benefits of targeted regional and national financial support for infrastructure, but it’s by no means an easy path and the funding is not an enabler by itself. What we need is a concerted focus and coordination of planning, finance, workforce skills and the enabling infrastructure to support successful investment and growth.
“Brexit didn’t feature heavily in the Chancellor’s speech today, although it still looms large amongst our long-term economic adjustments. Our EU exit would have created big enough challenges in normal times, with the disruption that inevitably results from the breaking of such well-established economic ties. However, arguably those challenges are dwarfed in the medium term by the changes triggered by the downturn, including the unprecedented shake up to the way people live and work.
“It will take decades to recover from the pandemic, which has generated the biggest economic shock and challenges we’ve faced since the Second World War. This Budget is a further dose of the medicine that we need to keep the economy functioning but it is also a cautious step towards addressing the bigger challenges beyond the pandemic. The jury is out whether these measures are enough to stimulate the economy and set us on the right road to recovery. By the autumn, we should ultimately have a clearer diagnosis and medium term prognosis about the economic state of play. The suspicion is that the Chancellor will need to take further steps to address the uncertainty and provide a clearer outlook for us all.”