When Chancellor Philip Hammond announced spending plans on infrastructure to make our economy “match fit” for the future it was music to the ears of many of the country’s small business owners and leaders.
Of the 5.5 million businesses in the UK, an impressive 99 per cent are SMEs. A recent CBI survey of 728 businesses before the Autumn statement spending announcement found that just under half (46%) were dissatisfied with the state of their local infrastructure. While 44 per cent believe the UK’s infrastructure has improved over the past five years and are encouraged by the government’s recent track record, confidence that overall infrastructure will improve in the coming five years had fallen dramatically since the 2015 Survey (from 43% to 27%). The majority of firms (64%) felt the UK is likely to be less internationally competitive in 2050 than it is now.
So was the government announcement to spend on infrastructure perfect timing for SMEs?
Business leaders are optimistic that the government pledge to invest £23 billion on infrastructure and innovation will help cushion the UK against Brexit.
Making the announcement the chancellor said that:
“Raising productivity is essential for the high wage, high skilled economy.” He added that Britain’s productivity gap is “shocking,” and told the House of Commons that the country lags the USA and Germany by 30 points.
“But we also lag France by over 20 and Italy by eight. Which means in the real world, it takes a German worker four days to produce what we make in five, which means, in turn, that too many British workers work longer hours for lower pay than their counterparts,” he added.
Spending on infrastructure will now expand from 0.8% of GDP currently, to between 1% and 1.2%.
How will the funding on infrastructure be distributed?
The new National Infrastructure and Construction Pipeline contains:
over £500 billion of planned investment, with over £300 billion of this to be invested by 2020/21
over 720 projects and programmes across transport, housing and digital to fire up the nation’s infrastructure
around 20 new schemes have been added to the pipeline since March 2016, including the Oxford to Cambridge Expressway
Chief Secretary to the Treasury David Gauke said:
“This record infrastructure pipeline is set to make a real difference to people’s lives from quicker and easier journeys, to better broadband access, and building more homes for people who need them in high demand areas.
“It is clear proof that we are absolutely committed to ensure our infrastructure is fit for the future, which is at the heart of our ambitious plans to close the UK’s productivity gap and build a fair economy for everyone.
“It builds on our strong record of delivering the modern infrastructure this country needs for the twenty-first century.