On Monday 21 November, Theresa May, in her speech to the CDI, proclaimed that her Government believed in free markets, capitalism and in business. This Autumn Statement is an attempt to develop an Industrial Policy in practice rather than in words by attempting to enhance the wider framework conditions that support economic growth or inclusive economic growth.
In the CBI speech the Prime Minister set the limitations on this ambitious agenda for Britain when she noted that the Chancellor “ will commit to providing a strong and stable foundation for our economy: continuing the task of bringing the deficit down and getting our debt falling so that we can live within our means once again”.
Yesterday’s Autumn Statement reflects a somewhat limited ambition that is constrained by the UK’s structural deficit. There are rather too many uncertainties related to Brexit, the continued underlying weakness of the European economy and the known unknown that is President Trump. Much that is in the Autumn Statement has already been announced, an extra £1.3 billon of extra spending for road improvements over the next five years with a focus on repairs and removing bottlenecks and the £1 billon to support the introduction of ‘gold standard’ broadband.
There is some game changing news with proposed investment in electric vehicles combined with the new 23-billion productivity fund that will focus on innovation and infrastructure. We must remember that all this is borrowed funding and that it must be invested correctly so that there is a return to the national accounts. At best, this should be cost neutral but only time will tell. Skills and housing shortages are key constraints on the UK economy and the 3.15 billion housing fund is to be welcome. But, all this is important but relatively small change in the context of national infrastructure expenditure. This was an Autumn Statement that reflects the start of an attempt to forge a longer-term but mid-term strategy that will culminate in the 2019 Budget.