The first budget set out post Brexit and Covid-19 is bound to be a complicated one, but how will it impact the local economy? Dr Catherine Robinson, Deputy Dean and Senior Lecturer in Applied Economics and Business Statistics at Kent Business School, gives us her view…
This budget was not easy for the government. They needed to ensure we support businesses and stimulate economic activity as we emerge from the pandemic but also recognise that Covid-19 needs to be paid for.
Public finances are a mess – the worst level of national debt since 1945 – the government walks a fine line. This is against a backdrop of green growth and the levelling up agenda; and while the two are not necessarily incompatible, they also constrain recovery in the traditional sense of national GDP growth.
Forecasts presented by the Chancellor painted a more optimistic picture than expected, in part due to the success of the vaccination programme so far. The OBR predicts 4.1% growth for this year and 7.3% for 2022, but this runs the real risk of higher levels of unemployment as the economy emerges from lockdown and government support schemes are slowly removed.
What’s in it for (S)ME?
We saw some good initiatives in terms of the Help to Grow scheme that specifically target upskilling within the SME sector – an initiative worth £520m for financial management and digital skills and linking SMEs to HE providers. Clearly the hope here is that this will foster university-business links going forward.
In addition, the super-deduction scheme will hopefully stimulate capital investment to take place now, rather than being postponed to more stable times.
If the Government is to meet its Industrial Strategy target of R&D investment at around 2.4% of GDP, then it will need to encourage a highly skilled workforce and invest in the skills needed for this. The positive steps to allow for immigration for high skilled workers are welcomed.
For Kent, Margate received funding as one of the Town Deals, giving it a share of £1bn alongside 44 other towns in the UK, for infrastructure projects.
Elsewhere there were few regionally targeted schemes that will be of benefit to the relatively affluent South East. While there was little sectoral specific support, hotels, leisure and hospitality businesses in Kent will be pleased with some of the minor announcements.
Whether they go far enough to prevent mass business failure remains to be seen.
Dr Catherine Robinson is Deputy Dean and Senior Lecturer in Applied Economics and Business Statistics at Kent Business School.