Spring Budget 2020: Regional business reaction

March 11, 2020

Business West, the region’s largest business organisation, has welcomed Chancellor Rishi Sunak’s response to the coronavirus crisis in his Budget – but warned that its commitment to funding big-scale ‘levelling-up’ infrastructure projects through borrowing could unravel if the economy goes into recession.

Managing director Phil Smith, pictured, said a strong statement of intent from the Chancellor on tackling coronavirus was absolutely the right thing to do, given the growing scale of its damage to the global economy and likely impact on the UK. 

“The scale of the response was impressive. If the past few weeks has been about turning on the taps to wash our hands, here was the Chancellor turning on the UK’s fiscal taps to try and avoid the worst,” he said.

“It also shows welcome co-ordination with the Bank of England to help provide support direct to businesses and indirectly to their workers.

“For business his message was that this support would act as a ‘bridge’ to help cope with one-off stresses and make it through to a resumption of normality.”

When many businesses were feeling worried about how to cope, Rishi Sunak’s proactive firepower would be very welcome, Mr Smith said.

This was a big spending Budget in the short, medium and long term, and although some of the measures were populist – with freezes on all alcohol duties – most of the money would be on capital expenditure: particularly on infrastructure.

“Much of this is very sensible. The UK has underspent on infrastructure for far too long – pursing a ‘penny wise, pound foolish’ strategy,” he added.

“With global borrowing so cheap it makes sense to increase our spending on transport, housing, broadband, skills and research and development – all of which have the potential to boost long-term growth.

“This included welcome namechecks for improving the A417 in Gloucestershire and the A303 near Salisbury, and new investment in roads, rail, university research and a new ‘blue skies funding agency’ modelled on the American ARPA (Advanced Research Projects Agency).

“There was stress on business innovation and international trade, with new trade envoys announced for the West of England around the world.”

This was the right response to a possible big economic shock, and also some long-term infrastructure challenges, said Mr Smith.

But he added: “There remains a daunting global backdrop. No one yet knows how big a shock coronavirus will bring us. Today the ONS had already announced that growth from January to March had stalled to zero.

“The government’s growth projections had also been shrinking, even before coronavirus had been taken into account. And we still face major changes in our global trading relationships, and with the EU, when the transition period ends on December 31.

“Some will therefore be nervous that this Budget could be a hostage to fortune, reliant on continued benign global interest rates, a rapid return to growth, and with a needed clawback through higher taxes in two or three years’ time.

“A short-term boost to help the UK out of a difficult place, we now place our faith that the future will take care of itself.”

Business West runs Bristol Chamber of Commerce and the Bristol Initiative. 

South West CBI director Deborah Fraser largely echoed the comments from organisation’s national director-general in welcoming the Budget but added that what stood out for her – and the South West – was the Chancellor’s message about the A303 at Stonehenge.

After namechecking a number of roads across the UK that he aims to invest in -m including the A417 from Swindon to Gloucester – he said: “There’s one more road I want to mention. It’s one of our most important regional arteries.

“It is one of those totemic projects symbolising delay and obstruction. Governments have been trying to fix it since the 1980s. Every year, millions of cars crawl along it in traffic.

“Ruining the backdrop to one of our most important historic landmarks.

“To the many who have campaigned for this moment – I say this: The A303 – this government’s going to get it done.”

Ms Fraser said: “We need to get this long running infrastructure priority for the region finally sorted.”

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