Driving forward with the handbrake on
The Government’s proposed Modern Industrial Strategy aims to drive growth by being
pro-business and pro-jobs. However, the fiscal policies announced in the Autumn Budget may mean we’re driving forward with the handbrake on.
When I was small, I woke up one day to see our neighbour’s car was parked in the living room of the house opposite. A steep drive and the poor application of a handbrake were to blame. Luckily, no one was hurt, but it demonstrates the importance of knowing which levers to pull, and when.
In October last year, the Government published its Green Paper on Industrial Strategy – Invest 2035 – describing it as “central to its number one mission of growth”. The paper raised 35 questions and invited responses from stakeholders across both the public and private sectors. Crowe contributed to those responses. The final Industrial Strategy and accompanying Sector Plans for the eight ‘growth-driving sectors’ (ranging from defence to creative industries) will be published in Spring 2025, alongside the Spending Review.
The aim is to deliver the certainty and stability businesses need to invest in the high-growth sectors. You could argue the Autumn Budget contributed to certainty, if not stability.
On the positive side, the paper highlighted the UK’s success in attracting strong foreign direct investment, particularly for digital technology projects. The UK has the third largest tech ecosystem globally by investment. With Crowe serving more Technology and Media clients than any other sector, I was pleased to see the UK’s strengths in certain digital and creative industries highlighted, including climate tech, fintech and entertainment.
However, two significant barriers to growth were also identified: persistently low levels of private sector investment and the challenge of converting research, development and innovation into commercial opportunities. Despite our world-class research base and significant equity funding for spinouts (only the US raises more), these issues remain. The new National Wealth Fund, capitalised with £27.8bn, is the Government’s attempt at unlocking ‘billions of pounds’ of private investment.
Whether the Industrial Strategy will positively support UK business and ultimately move the dial on growth remains to be seen. What is certain is that business leaders will ultimately be the ones to deliver the growth we desperately need, and that boils down to their own confidence, creativity and ambition. Fortunately, we have a positive entrepreneurial environment, driven not just by financial motivation, but also by a desire to contribute positively to society at a much-needed time. The UK has particular expertise in the technologies needed for Net Zero, for example.
The announced increases to CGT and Employers NIC, as well as caution on interest rates, mean the handbrake is still on for now, but if we play to our strengths and put our foot down a little bit harder, UK business can still look forward positively.
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Contact Mark Allen on [email protected] to find out how Crowe can help you to make smart decisions that create lasting value.
