Government “Mini-Budget” Reaction
Statement from Richard Swart, Chair of the Advanced Manufacturing Forum (AMF)
We welcome the freezing of corporation tax, the cancelling of the National Insurance increases, the announcement of new investment zones and the permanent increase to the annual investment allowance of £1 million.
A nice, welcome inclusion is the plan to support over-50’s back to work, whose maturity and experience is needed more so than ever in the current depleted labour and skills market.
We welcome too the energy support for businesses and employees, though all wait with interest to see the evidence of this benefit in our bills.
As a growth plan, however, we fear it will be fatally undermined by the much bigger than needed tax cuts announced and the intention to go further and borrow even more. The timing is particularly poor, fuelling national debt to unsustainable levels if the government presses ahead, according to the Institute for Fiscal Studies.
Predictably the pound has crashed against the $ and €. Unless there is urgent intervention, it could be sometime before it returns to the higher pre-budget levels. While a weak pound will help exporters, it will also fuel import inflation and the UK is by a far a net importer. Inflation is already at a dangerous high with further interest rate hikes now likely very soon.
With the Covid economic bounce-back over for many, these further pressures on prices and borrowings in a time of deepening hardships experienced by employers and employees are really worrying us all.
We call on the government to seriously consider what is happening in the markets, be bold enough to reflect and review rather than stubborn enough to refuse and pursue what could turn out to be a race to the bottom.
Most manufacturers need stability for growth and confidence. Although the mini budget was well intentioned and to be welcomed in many aspects, overall, we fear it will not deliver growth due to the flaws therein.
Furthermore, we ask as a matter of urgency the government proposes a migration policy that will ease the ever-increasing skills and labour shortages across all sectors.