South East: EY reaction to Budget – technology, enterprise zones and manufacturing/reshoring
Gareth Anderson, tax partner at EY across the Thames Valley & Solent, commented on the chancellor’s Budget.
Investment of £40m to develop ‘Internet of Things’ technologies:
“The investment by the UK government into continued research in this space is a welcomed announcement. However, the chancellor needs to remember both the risk and opportunities for the UK of the Internet of Things (IoT).
“The interconnectivity of people, devices and organisations in today’s digital world opens up many exiting new opportunities and the ability to create efficiencies across key areas such as health and social care. However, there remains a whole new playing field of vulnerabilities as traditional organisational perimeters erode and existing security defences come under increasing pressure, requiring a rethink in how organisations approach cybersecurity. Therefore it is imperative that the funding allocated by the Government not only supports the opportunities posed by the IoT but addressed the inevitable risks it also brings.”
Enterprise zones could help to create next wave of globally-competitive companies
“By extending, amending and creating new enterprise zones across the UK, and funding key emerging industries in the regions, the chancellor has acknowledged the importance of helping entrepreneurial, high-growth firms shape the future of regional growth and the wider UK economy.
“By encouraging hubs of excellence in specific industries and segments, the UK could help to create the next wave of globally competitive companies, as well as attract vital jobs and wealth to UK regions via inward investment to help rebalance the economy.”
Scattergun approach to UK industry won’t be enough to deliver on reshoring opportunity
“Rather than picking industry winners, the chancellor has taken a ‘scattergun’ approach to supporting UK business. From the investment in the new Energy Research Accelerator and the Croxley rail link, to the expanded support for postgraduate research and plans to extend the Oxford Science Vale Enterprise Zone
“As we demonstrated in our Reshoring report, the UK has a once in a generation opportunity to grow its manufacturing base. Changes in global economic conditions, corporate strategies and consumer tastes have put future manufacturing investment in play. The UK will not regain the 700,000 plus jobs it offshored between 1995 and 2011, but a sector-focused strategy could capture 300,000 jobs over the next decade.
“Our analysis suggests that sectors such as life sciences, chemicals, advanced engineering, aerospace and automotive offer real opportunities for the UK. However, success requires a joined up long-term plan over two Parliaments with investment in skills, changes to tax, and investment in infrastructure all required.
“The plans announced today address several of the sectors identified but not on the scale required to drive real growth as the OBR's forecasts appear to confirm. In 2019, there is a planned increase in government investment of £5 billion but this is too little too late: the opportunity is large scale and immediate, and the UK risks missing out.”
