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As the British public welcomes the (gradually) improving Spring weather, this lunchtime the question on the lips of businesses and industry was whether Chancellor Rachel Reeves’ Spring Statement would herald a similarly bright outlook for the UK economy.
The context for the Statement was undoubtedly gloomy – the OBR’s forecast, released as the Chancellor stood at the Despatch Box, halved the UK’s 2025 growth estimate to 1%.
Today’s speech was Rachel Reeves’ chance to try to restore some degree of confidence in the Government’s economic plan amongst the city, business leaders and the general public.
So, did she achieve her aims? Should businesses feel reassured that they are operating in conditions that allow them to invest, grow and support the UK’s drive for increased economic activity?
And for companies looking to engage with government, and influence their ongoing policy, regulatory and commercial environment, what are the three steps they should take now in response to today’s announcements?
The Chancellor needed to respond to two key, often competing, challenges: maintaining rigour in the public finances, while driving delivery of better public services.
An increase in spending on public services was always off the cards, with economic headwinds wiping out nearly £10bn of fiscal headroom that was earmarked for additional spending.
But for businesses, this presents an opportunity. If the Government is to meet its economic ambitions, and deliver first-class public services, it will need to significantly improve the efficiency with which it does the latter.
To this end, the Chancellor announced the Government’s £3.25bn Transformation Fund, which aims to deliver efficiencies across government.
AI and digital technology will be at the heart of this plan, providing a unique opportunity for companies to offer solutions, ideas and insights about how to deliver significant public sector impact.
The same is true for defence.
The Prime Minister has bolstered his reputation via the support he has offered Ukraine, and how he has galvanised Europe into taking responsibility for its own defence.
But that responsibility is expensive.
Today the Chancellor announced an additional £2.2bn increase in defence spending in 2025-2026. The Government hopes that this spending, as well as making the UK more secure, will lead to jobs and investment opportunities; an argument supported by other European leaders including incoming German Chancellor Friedrich Merz who has put significant funds into both defence and infrastructure investment.
Now is the time for businesses that can help support European defence security to engage with government and shape its approach. Solutions and insight that help bolster security, and critically drive economic growth, will find a warm welcome.
What is more, the Government is keen that this defence spending is devolved across the UK, providing a particular opportunity for organisations with a footprint in wider regions.
All businesses are hoping that Labour’s plans for driving economic growth succeed. But companies need to be active participants in the Government’s work to achieve this.
Today’s Spring Statement offers industry clear direction about where to engage and how. There are three key takeaways:
1. Upweight efficiency in your messaging: Reorientate your messaging, where appropriate, to a focus on public sector efficiency, and how your organisation can contribute to driving long term economic growth.
2. Engage widely across departments: your sector’s sponsoring department is always critical, but Treasury, the Department for Business and No10 hold the key to unlocking broad opportunities and influencing the development of your policy environment.
3. Behave like a partner, not a vendor: The Government is looking for business to join them in a genuine partnership to help drive economic growth. This will create opportunities, but requires businesses to work collaboratively with policy makers and civil servants on genuine solutions to tackle the country’s economic challenges.
Now is the time for businesses to position themselves both as drivers of economic growth and offering solutions to some of the most complex policy challenges facing decision makers. Don’t miss this opportunity to engage and influence Britain’s growth agenda at a time when the UK Government needs business most.
To discuss any of the issues emerging from the Spring Statement, and what they mean for your business, please email [email protected].
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