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Chancellor presents economic roadmap post-Covid

05 March, 2021

Having been given the political roadmap out of the pandemic and a view of a return to some sort of normality the Chancellor presented the economic roadmap out of the recovery in the recent Budget. Stephen Phipson, Make UK CEO, reports for Smart Machines & Factories.

Overall, given the difficult circumstances the economy and sector has faced we welcomed the certainty and clarity he has provided about the route forward, at least in the short-term. The statement pursued a positive and fair middle road which balanced the need to avoid squeezing the recovery before it has started, whilst avoiding any artificial boost given the inevitable strong bounce-back once the economy begins to open up.

Make UK had campaigned hard for an extension of the furlough scheme which was a welcome step but the most eye-catching announcements concerned the rise in Corporation Tax which was balanced by the ‘super-deduction tax’ with the aim of boosting levels of investment which have been hit significantly. Whilst the sharp rise in Corporation Tax would not be welcomed by many, at such a challenging time, a rise was probably inevitable in the interest of fairness and the need to pay back the substantial help that business has received. While the ‘super-deduction’ tax is  a clear recognition that we urgently need an investment-led recovery, it remains to be seen how far it will just bring planned investment forward, or whether a period of two years is too short given the length of some investment cycles. The promise to consult on further changes to R&D is also welcome and Government must now move urgently to implement this so further policies to boost levels can be brought forward.

 The one thing that still remains absent, however, is a clear plan for the long term vision of the economy. Having provided the short-term route forward Government must now seize the opportunity provided by new technologies and the drive towards net zero to set out a longer term vision for the economy. This must include a long-term Industrial Strategy which looks ahead twenty years and involves a laser like focus on innovation based on a partnership between the public and private sectors, together with our world class science base.

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