NEXT week brings the Chancellor of the Exchequer’s Spring Budget statement and there are some opportunities Jeremy Hunt could take to improve the prospects for a city economy like Glasgow’s.
The British Chambers of Commerce submission captures the essence of a relatively grim picture for British business. Specifically it reports the results for Q4 2022 from its Quarterly Economic Survey (QES) showing that "indicators have stabilised at a low level but there remains no sign of a recovery".
The two most important issues hindering that recovery are cost inflation and persistent skills shortages combining to drive down business expectations for investment and growth. Only one in three businesses believe their profits will improve in the year ahead with slightly more expecting a decline. Inflation is the top concern with 80 per cent of survey respondents but taxation (38%) and interest rates (43%) are growing in significance.
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Perhaps the most worrying message was from SMEs, with more than half reporting that it would be difficult or impossible to cover their energy bills when the UK Government’s Energy Bill Relief Scheme comes to an end on March 31. And nearly three-quarters of companies are experiencing skill shortages and with 82% confirming recruitment difficulties reaching the highest rate ever since the QES began in 1989.
Given these concerns the British Chambers of Commerce (BCC) Budget recommendations include a variety of measures designed to help businesses cope with energy costs that look set to stay high after the Energy Bill Relief Scheme comes to an end.
Further subsidy for the most vulnerable businesses in line with suggestions that households are to get a further three months would be very welcome but BCC is also asking for Government investment in funding to help businesses improve the energy efficiency of their buildings.
Perhaps the most unusual feature of this year’s submission though is the list of policy recommendations BCC is making for employment and education. The focus is on tackling economic inactivity and for Glasgow this is an especially important issue. Glasgow has very high levels of household worklessness, appalling levels of ill health and one of the highest shares in the UK of its working age population reporting absolutely no skills qualifications whatsoever.
Most skills and education policies are devolved and fall to the Scottish Government but the BCC does suggest some interesting measures for the Chancellor. Encouraging businesses to offer occupational health services by making them a non-taxable benefit is one example.
So too would be increasing the tax relief options for parents incurring childcare costs. It would be for the Scottish Government to look at the funding options for helping adults of all ages access flexible skills provision. The reported cuts being made to college budgets for next year are not an encouraging sign.
Outside of these BCC recommendations I would suggest one area where the Chancellor could have an impact in speeding up Glasgow’s recovery from the pandemic. The growth of new industry around Glasgow’s three innovation districts in engineering, life sciences and advanced manufacturing is one of the brightest spots in the future for the city’s economy.
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The UK Government’s recent investment in Glasgow as an Innovation Accelerator Partnership (IAP) is helping to embed business investment in commercialising research in sectors as varied as space, precision medicine, fintech and photonics. A further round of IAP funding would be welcome. But so too would be the allocation to Glasgow City Region of one of the Chancellor’s Investment Zones which are set to be focused on areas with strong capabilities in academic research and innovation.
Glasgow missed out on support for its Clyde Green Freeport bid – and the scoring results suggest that the bid may have been just as deserving if not more so than at least one of the two that succeeded. It would be a fitting recognition of Glasgow’s potential for economic recovery to see further government support for its most promising new industries.
Stuart Patrick is chief executive of Glasgow Chamber of Commerce
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