The Summer Budget on Wednesday 8 July must strike a balance between eliminating the deficit and stimulating growth, says Phil Smith, managing director of Business West. Although the Chancellor is likely to focus on the cuts and reform, he must also concentrate on infrastructure, boosting exports and tackling the skills gap.
“The General Election result provided clarity in the form of a majority government, but our latest quarterly polling found that business confidence remains fragile. As a result, when the Chancellor stands up in Parliament on Wednesday to outline the blueprint for deficit reduction he must also address three themes that are vital to business– investing in infrastructure, boosting exports and closing the skills gap.
“First on the menu is infrastructure. Businesses rely on transport and digital communication networks to move people, goods and services, and the failure to invest in capacity and maintenance is hampering their prospects. Equally, having access to affordable housing is a major priority for companies seeking to attract and retain the best talent. Last week we heard the good news that the electrification of the mainline to Bristol, Bath and Swindon will go ahead despite the Government stopping similar projects in other parts of the country. Although this announcement was a shot in the arm for the South West, firms remain concerned that spending remains too focused on areas of short-term benefit and political convenience rather than measures capable of boosting productivity.
“Secondly, the Chancellor must unleash measures to pump new blood into British exports, with the UK battling a trade deficit and the government still falling far short of its target of £1 trillion exports by 2020. South West firms exported £13.8 billion worth of goods and services last year but many businesses still require more support to take the leap. Recently we heard the Cole Commission call for an overhaul of our national approach to boost firms’ access to foreign markets, and the first budget of a new parliament is a perfect time to kick start this drive.
“Finally, with a sense of déjà vu, we are calling for government to take action to address the skills gap amongst the workforce. Straight after the General Election we heard George Osborne promise a ‘productivity plan’, but improving output requires tackling one of the main problems at source. Some progress has been made as we are seeing youth unemployment fall, but at 16.1% it still stands way above total unemployment rate of 5.5%, and it is imperative that we create a stream of work ready young people to power our economy. It is also important to fund training opportunities for adults, as we need to ensure our whole working population is able to effectively adapt to an ever changing economy.
“Businesses support the government’s goal of deficit reduction, but it must be achieved without detriment to growth. The first budget of a new parliament could make or break business confidence in the next five years and The Chancellor must strike a balance between eliminating the deficit and tackling the issues that hurt firms day in day out.”
To find out more about Business West visit: www.businesswest.co.uk
Pictured above: Phil Smith, managing director of Business West