UK business groups give cautious welcome to Chancellor’s speech

Business groups have welcomed signs that the UK Government will take a more flexible approach to fiscal policy.

Chancellor Philip Hammond told the Conservative Party conference on Monday that he will prioritise spending on new housing and transport rather than stick with his predecessor George Osborne’s target of eliminating the deficit by 2020.

Hammond said that the UK’s vote to leave the European Union may cause “turbulence” and it was “common sense” to invest to support growth and jobs, BBC News reported.

“When times change, we must change with them,” he told delegates. “So we will no longer target a surplus at the end of this Parliament. But make no mistake the task of fiscal consolidation must continue.

“The British people elected us on a promise to restore fiscal discipline. And that is exactly what we are going to do. But we will do it in a pragmatic way that reflects the new circumstances we face.”

Hammond’s speech came after Prime Minister Theresa May announced that she would formally trigger the UK’s exit from the EU using Article 50 of the Lisbon Treaty by the end of March 2017.

Carolyn Fairbairn, director-general of the CBI, said in a statement on Monday:

“With the clock now ticking on an EU exit, it’s good to see the Government set out the right chapter headings on how to boost confidence in our economy. We must now hear more on how government will work with business to build an inclusive, long-term industrial strategy. The Autumn Statement must move us several steps on to drive future investment and innovation across the country.”

On housing, Fairbairn said that the Chancellor is “absolutely right” to want to tackle the shortage of homes in Britain, with a focus on unlocking brownfield sites and surplus public sector land.

“Housing is a critical social issue and underpins regional productivity,” Fairbairn added. “We have a mountain to climb on this front if we are to reach our targets and continued determined action will be needed.”

Adam Marshall, acting director general of the British Chambers of Commerce, also said that Hammond was right to “reaffirm the need to boost infrastructure, business investment, and to raise productivity, while being mindful of reducing the deficit”.

Marshall continued: “The Chancellor’s mission must be to reduce uncertainty and build business confidence. He made an important start on both today, but must now give the green light to major infrastructure projects and set out other measures to boost business investment over the coming weeks. Unambiguous commitments to runways, roads and railways need to follow today’s commitment on house building – as these will crowd in investment by companies of all sizes, all across the UK.”