The Autumn Statement has come and gone, and IOE&IT gave its initial reaction here. But now, as the dust settles, we can go into the details of what it means for businesses that trade internationally.
IOE&IT UK public affairs lead Grace Thompson here gives her five key takeaways for traders, with input from head of policy Hemita Bhatti and investment zones manager Kiera O’Keeffe.
1. Tax cuts
From making full expensing permanent to cuts to both employee national insurance and national insurance contributions (NIC) for the self-employed, tax cuts were a popular aspect of the Autumn Statement. Yet, there were also critical questions posed by various economic experts.
For example, Paul Johnson, director of the Institute for Fiscal Studies, queried: “How did Mr Hunt afford tax cuts when real economic forecasts got no better?”
He was here referring to the fact that economic growth had been downgraded by the Office for Budget Responsibility (OBR).
Overall, however, the tax cut announcements have gone down well with most businesses.
2. Specific small business support
There was a range of measures announced which could benefit SMEs, particularly in certain sectors.
For example, the government will expand the ‘Made Smarter Adoption’ programme, which helps manufacturing SMEs use advanced digital technologies. There was also a commitment to offering additional support to small businesses through UK Export Finance, including reviewing products available for SMEs and enhancing focused support.But the jury is out on whether these measures go far enough to support small businesses. The UK Business Forum founder, Richard Osborne, noted that the Autumn Statement could have done more to “address concerns around business rates, corporation tax, support with energy bills and VAT reforms”’
IOE&IT head of policy, Hemita Bhatti, said that the Autumn Statement does include positive measures for small businesses, but highlighted that concerns nonetheless remain.
“This Autumn Statement will support many small British businesses become more innovative and digitalise through better access to finance and technologies. The announcement to expand the ‘Made Smarter’ programme will also be welcome news for SME manufacturers across the nine regions of the UK that will now get access to technology advice, skills training and funding for tech projects and digital internships.
“The freeze on the small business multiplier for business rates in England for next year’s bills, which removes the scheduled CPI inflation increase, is a step in the right direction for SMEs.
“However, sustained expenses due to inflation rates hiking energy bills and labour costs still concern SMEs, with some calling for the complete scrapping of business rates to remain competitive.”
3. A focus on apprenticeships
The apprenticeships announcements also perhaps didn’t go far enough for many who have campaigned in this policy area, particularly those who know how vital upskilling is for trading businesses.
Whilst the chancellor announced a significant package of £50m funding over the next two years to increase the number of apprentices in engineering and in other key growth areas where there are shortages, there was little detail to be seen about what this will look like. There was also no announcement in relation to reforming the apprenticeship levy.
The eagle-eyed may have noticed this sentence from the 120-page Autumn Statement document:
“The government continues to work closely with businesses to improve the apprenticeship system to meet the needs of learners, employers and training providers.”
For those disappointed to still not see any firm plans to reform the apprenticeship levy, this sentence suggests there are still opportunities to shape how the system may look going forwards.
4. Digital Taskforce
The future is digital and trading businesses are increasingly embracing this. The government is due to set up a taskforce with industry to explore how best to support SMEs to adopt digital technology to improve their productivity.
Whilst it will remains to be seen exactly what this taskforce looks like, it is a huge opportunity for SMEs which trade internationally to explore how they can save costs through digitising processes and follows on, in a timely manner, from the adoption of the Electronic Trade Documents Act earlier this year.
5. Foreign Direct Investment
The much-awaited Harrington Review of Foreign Direct Investment has been published alongside the Autumn Statement. The government has responded and accepted, in principle, the headline recommendations.
A section of the review specifically covers export support as ‘part of the investment package’. It acknowledges that businesses spoke to them about the importance of export opportunities in their choice of where to invest internationally, particularly as the UK domestic market of £67m is not sufficient to match either the US or the EU for manufacturing and life sciences companies.
The review recommends that the UK ensure that export support is prominent in its investment promotion materials, particularly the Export Development Guarantee.
IOE&IT’s UK investment zones manager, Kiera O’Keeffe, comments that the review comes at an “exciting time” and echoes the IOE&IT’s sentiment that “trade and investment are two sides of the same coin”.
“This review comes at an exciting time for UK inward investment. It serves as an opportunity for government to renew, redirect and reinvigorate its focus on foreign direct investment, particularly in the context of the Windsor Framework Agreement and opportunities stemming from dual-market access in Northern Ireland.
“The report echoes both our sentiments and strategy at IOE&IT – that trade and investment are two sides of the same coin, and that the provision of foreign direct investment services at our organisation will reflect the intimate nature of the two.”
Political impact
Following the Autumn Statement, polling has improved slightly for the Conservatives in YouGov’s latest Westminster voting intention tracker. They are up four points in comparison to last week.
Speculation about whether a general election will now potential occur in May is rife, due to the timing of various benefits arising from the Autumn Statement.
The most important question, however, is not when the next general election is but whether businesses which trade internationally will feel as though they benefit from the measures above.
Only time will deliver on that verdict.