According to City groups, Philip Hammond didn’t manage providing sufficient help to the so-called JAMs (just about managing businesses) while they are getting ready to an economic growth slowdown.
City found the chancellor’s first speech on the matte solid and focused, even though Britain at that time was just about to vote for or against leaving the EU. Such confidence might have been a mistake.
The Institute of Directors called the speech sober and sensible at that time. However, seeing how Theresa May’s manages to focus on providing help to the JAM families, they said that the business support could have been better in such a situation.
According to Simon Walker of the Institute of Directors, the decisions to help the situation by investing in housing and transport were a good idea. However, business industry would also be happy to get some support and investment.
He said that with the Office for Budget Reposonsibility predicting that next year will be the low point for growth, the group was “surprised that amidst all of the political and economic uncertainty there weren’t many measures to help ‘just managing’ businesses now”.
“The government will be borrowing heavily over the next few years, so it’s a shame that they couldn’t use more of the fiscal headroom to encourage investment through measures such as raising the annual investment allowance, which could deliver productivity increases sooner,” he said.
The Federation of Small Businesses echoed the sentiment, insisting that “there will need to be stronger fiscal intervention to boost the economy next year, with the prospect of weaker longer-term growth looming”.
Mr Walker said he had not expected “anything flashy . . . and we didn’t get it, but that’s not necessarily a bad thing from the man in charge of the economy”.
The British Chambers of Commerce, meanwhile, said business recognised that Mr Hammond’s hands “are somewhat tied by lower tax receipts and sharply higher borrowing forecasts”. Adam Marshall, its director-general, suggested that a move to invest to boost productivity and economic growth “demonstrates welcome flexibility during a period of uncertainty and change”.
“There was very little support in our business communities for further cuts to corporation tax, so Philip Hammond was right to stick with existing plans,” he said. “However, we would have liked to see more action on the high up-front taxes and costs of doing business in the UK, particularly business rates.
“The government’s decision to move to a single annual set of tax and spending commitments will be welcomed by businesses weary of frequent and sometimes unclear changes of direction.”
Downing Street’s decision to rip the autumn statement out of the fiscal calendar, moving to budget to later in the year and focusing on economic forecasts in the spring, was universally welcomed. The CBI said the move would “provide stability for business”. The IoD also praised the shake-up, adding that “too much tinkering only makes the tax system more complex”.
Mike Cherry, the national chairman of the FSB, welcomed the government’s decision to increase infrastructure investment.
“Small firms want to grow, export, innovate, recruit and be more productive and they need to know as soon as possible the framework they will operate in,” he said. “Today’s moves to tighten conditions for the self-employed must also be followed up with help to give them parity in benefits so that the UK’s army of genuine self-employed people will continue to grow.”
The CBI said the investment packages outlined by Mr Hammond were a “pragmatic down payment on future productivity growth”. Carolyn Fairbairn, the CBI director-general, said the Treasury’s decision to focus on research and development, housing and infrastructure would help businesses across the UK.
“These measures must now be translated into action,” she said. “That means tarmac, tracks and telecoms being laid, and clear, deliverable timetables for major projects — only then will they act as a catalyst for investment, jobs and growth.”
Mr Hammond’s new fiscal rules — to balance the books “as early as possible” after 2020, cap welfare spending and ensure that public sector net debt as a share of GDP falls by the end of the decade — were also welcomed. Ms Fairbairn said they would “provide the government with welcome flexibility, while remaining prudent, in uncertain times”.