EY Cambridge comments on Spring Statement

13/03/2018

Stuart Wilkinson, Partner at EY in Cambridge. comments on the Chancellor's Spring Statement: “The figures in today’s Spring Statement underline what we already know – and indeed what EY’s own Regional Economic Forecast shows – that we are seeing a slowdown in economic growth across the UK, with the OBR forecasting a fall in GDP from 1.7% growth in 2017 to 1.3% in 2020.

“Our research shows that in the East of England we are predicted to grow at an annual GVA growth rate of 1.7% to 2020. With over 50% of Cambridge’s growth in the next three years forecast to come from Information and Communications Technology (ICT) and professional services, investment in these areas will be vital to maintaining this trajectory.

“Our own research shows that the more a region is exposed to ICT (information and communications technology) and professional and financial services, the faster the growth tends to be, as those sectors continue to drive the economy.

“So the Government’s commitment to investing more in digital initiatives, such as 5G test beds, is welcome but yet more is needed if this region and the country’s productivity growth is to be improved.”

Chancellor sets his stall for what will be in this year’s Budget

“Someone who’d missed the Chancellor’s protestations over the last few weeks would be forgiven for not realising that we’d moved from a Spring Budget to a Spring Statement.  With the same level of jokes and updates on the economy, all that was lacking was the bulk of tax related measures that normally follows the first 20 minutes of the speech. Instead we saw the Chancellor lay bare his ideas for the November Budget: the taxation of digital companies, potential changes to the VAT threshold, taxation increases to discourage single use plastics, with the money raised ear-marked for incentivising innovation, with a £20m down payment to boot.

“So, ironically, in the Spring Statement, for once we have seen a real Pre-Budget Report –something that has been difficult for previous Chancellors to deliver. The extra time to consult is very welcome and should allow discussion of the topics while the ideas are forming, rather than once the government has become committed to developing the concepts to fruition.

“This provides the business community the opportunity to engage in the consultation process before the Treasury makes any decision.”

 

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