This Autumn Budget fell a little short of the ‘do no harm’ test, especially concerning the bank tax, writes Miles Celic

Recognising what drives growth is easier than delivering a Budget that supports it. The Chancellor was right to acknowledge the contribution financial and related professional services make to jobs and investment across the UK. But his measures didn’t consistently match that ambition. Announcements on defence, resilience and devolution were welcome and offer opportunities for our industry to lean in with the necessary capital, expertise and skills. Raising the bank surcharge – albeit for a timebound period – pulls in the opposite direction.

A ‘do no harm’ Budget was our test. It is one that the Chancellor has not quite met. While the increase in the bank tax surcharge from January next year from three per cent to six per cent is specifically timebound to 15 months, its impact nevertheless hits the UK’s attractiveness compared to its main competitors. Its temporary nature matters, but only if the Chancellor honours his commitment to removing the increase after 15 months.

This matters because financial and related professional services extend well beyond the City. They are a major contributor in every region and nation across the country. The industry accounts for 11 per cent of UK economic output and employs around one in every 13 working people, with two thirds of those jobs outside London. It enables growth across the wider economy and makes a real difference to people in their daily lives, helping them to buy a home, invest for the future and manage risk. Tax decisions affecting this industry have consequences across the country.

For businesses looking to start, expand or invest, access to finance is key. The economic test is whether policy decisions make that easier or harder to secure. Any constraint on the capacity for firms across our industry to finance businesses risks working against the government’s ambition to increase investment.

Capital, businesses and talent are increasingly mobile. Raising revenue today must not come at the expense of the investment that supports the UK’s future growth and status as a world-class international financial centre.

The Chancellor’s decision not to remove Stamp Duty on UK equities was a missed opportunity to lower investment costs and strengthen UK capital markets. Encouraging companies to raise capital, grow and remain in the UK requires the right investment environment. Leaving this unnecessary barrier in place does not advance that ambition. On the commitment to reverse the cash ISA cut made in the last Budget, any reform here must have a clear focus on increasing investment into UK growth companies. 

Moves to shore up the country’s defence and resilience capabilities were welcome. The Chancellor is rightly focused on encouraging greater private-sector investment to fuel these ambitions. Our industry is ready to engage quickly to identify the investable opportunities across the defence supply chain and channel the finance and professional expertise required. 

The Innovative Defence Financing Taskforce could be very helpful to connect private capital with long-term needs. Delivery, however, requires credible opportunities, clear procurement arrangements and an allocation of risk that gives investors’ confidence.

The Fiscal Devolution Roadmap is also welcome. But its success should be judged by the investment secured and the opportunities created locally. And measures to boost entrepreneurship and tackle regulation were also positive.

The Budget was a mixed bag. While there were decisions taken that risk holding investment back; there were others that will – if delivered effectively and with the right partnerships in place – that will help to bolster UK competitiveness. 

The Chancellor has recognised what drives growth and what supports our country’s security. Our industry is part of the solution to these challenges. We’re ready to play our part in meeting them.

Miles Celic is CEO of The City UK