The Chancellor delivered an upbeat, optimistic and pro-UK Autumn Budget update. His aim is for a stronger economy, stronger growth, stronger employment and stronger public finances.
Few people would argue with these objectives but, as ever, the devil is in the detail so we look at how his announcements will impact our clients in the technology and digital sector.
The budget is set against a challenging backdrop of rising inflation at 3.1% in September and expected to rise to an average of 4% next year. Increased consumer demand, supply chain issues and rising energy costs were all blamed.
However, the Chancellor pointed to the OBR’s (Office for Budget Responsibility) expectation that the British economy would return to pre-COVID levels at the turn of this year, significantly sooner than expected. For this I’m sure he will be seeking some credit.
In fact, annual UK economic growth has been revised upwards to 6.5% and unemployment is expected to peak next year at 5.2% as opposed to the eye-watering 12% that was initially forecast.
Encouraging for the Tech sector
So this is all very encouraging for UK business and there was more to take encouragement from for the Technology sector, seen as a key driver for economic growth with investment in innovation shining through in the Chancellor’s plans.
Research and Development investment will increase by 50% to £20bn per year representing 1.1% of GDP. This is on top of the R&D tax credit scheme which will also see expansion. The UK has the second highest spending on R&D tax reliefs across the OECD (Organisation for Economic Co-operation and Development) and the scope will be increased to include cloud accounting and data costs, a huge bonus to our clients.
The Chancellor announced his commitment to give greater focus to UK spend on R&D, so from 2023 the reliefs will be focused more on UK delivered R&D rather than overseas delivered innovation.
The levelling up agenda is starting to come to fruition with £1.6bn earmarked for regional investment funds. I’m personally delighted to see the South West being awarded a £200m slice of the cake and with a further £150m going to the regional Angels programme, technology businesses in the South West will get access to the funding they deserve. Innovate UK’s budget has also been increased to £1bn providing further evidence that UK entrepreneurs are key to the Chancellor’s plans for economic growth.
Key initiatives announce by the Chancellor or receiving further investment to support entrepreneurs include the Help to Grow scheme, the Future Fund: Breakthrough and the Global Britain Investment Fund. I’m sure the details will unravel over the coming weeks but this investment can only be positive for GrowthBuilders’ clients.
The Chancellor also acknowledged Founders’ concerns around sourcing and retaining talent with the proposed visa for international talent access and the Global Talent Network being rolled out over the coming year. This should remove some of the friction we’ve all experienced in accessing specialist skills and talent following Brexit.
Plans announced in April for increases in Corporation Tax (from 2023), the super-deduction and the £1m annual investment allowance are all retained. Indeed, the annual investment allowance has been extended to March 2023, providing further encouragement for small businesses to invest in growth.
The message was received loud and clear, there is much to be optimistic about and many reasons to invest in innovation and growth. We will be working with all our clients to ensure they access the investment they need to fuel their growth.
Get in touch today to discuss how this impacts you and your business.