A lukewarm take on the Budget…

It was a Budget that went relatively long on addressing supply side challenges and promising wider public service reform. It took the form of an implicit bargain: the Chancellor mentioned in passing that she is asking businesses to contribute more, in return for a promise to fix the supply side challenges that I’ve repeatedly heard businesses raise over the past decade: Skills.Infrastructure. Access to the grid.

Just as measures were put in place to protect the lowest paid in society, so too were there some measures to protect the most vulnerable businesses in the form of rates relief for retail, leisure and hospitality firms, as well as an increase to the employment allowance. And I’m sure big businesses will welcome a degree of certainty with the corporations tax roadmap.

Proposals to reorganise local government while potentially removing layers of institutional capital in the form of the Business Board Network and pan-regional partnerships seem foolhardy to me, and there’s short-term pain for just about everyone – a penny off a pint notwithstanding – even if it’s not reflected directly in the “deductions” line of your payslip.

Broadly speaking, then, and without wanting to get into a debate about either black holes or what constitutes a working person, it’s a pretty Ronseal Budget – the Chancellor appears to have delivered what she set out to do. The obvious question is, will it pay off – and if so, when?

The “when” part is slightly easier. I wasn’t surprised to see growth forecasts downgraded. Supply side reform will take atleast the life of this parliament to really take effect – but the measures appear to be consistent with Labour’s promised decadeof national renewal (emphasis on decade). And of course, those growth forecasts can’t really take account of a range ofexternal factors like enhanced perceptions of the UK as a place to do business, and how that impacts on the propensity ofmulti-national corporations and globally mobile capital to invest here. There are green shoots that the Chancellor can pointto, such as £63bn of private investment announced at the International Investment Summit, and Government will hope thereis more to follow.

Now the “if” part. Well, the purpose of supply side reform is to enable the private sector to spread its wings. If businesseshave those barriers to investment removed, how will they respond? It’s encouraging that the IMF has responded positively,but we only have a partial picture. £3.5bn has been committed to the key sectors in the Industrial Strategy Green Paper, butwhat exactly that will look like on the ground has been kicked into the relatively long grass of the Spending Review (alongwith a few other things that are important to places’ growth ambitions, like the future of the UK Shared Prosperity Fund).I’m pleased that Growth Hubs and the Help to Grow Management scheme have been retained, but they need to be rolledout much further and faster. And why cynicism about politics at an all-time high, the extent to which anyone really hasconfidence in this gambit working is material. The fundamental question is, will the private sector believe in the Chancellor’spromise?

Either way, it looks as though we’re set for a few more years of relative stagnation before those sunlit uplands finally comeinto view. Fixing the roof while it’s raining is a tall order, but the Budget was at least a coherent attempt at doing just that.