Autumn Statement: Are infrastructure projects needed for growth?
Broadly, as wage growth is likely to remain flat and food and energy prices continue to increase, both confidence and disposable income falls. Hence, it becomes more difficult for the economy to achieve any growth as consumption is constrained.
In that scenario, if the government does want growth, this is going to have to come from investment. For that reason, I think there’s a strong possibility we are going to see a number of new infrastructure spending announcements made in this Autumn Statement.
Whether it is new airport capacity, new rail and road projects, or new housing developments, I think the government will be keen to get as many of these large infrastructure projects moving as soon as possible.
The funding of these may be a challenge politically for this administration. However, this would be growth based on investment for the future of UK plc, rather than consumption and the hope would be that as well as improving the UK’s infrastructure, that money will eventually filter through the economy into the pockets of the general public.
Secondly, given that there is seemingly less and less belief that we really are ‘all in this together’, it is possible that there may be announcements regarding the tax system. These may involve some form of simplification, but I suspect that the focus would principally be upon closing apparent ‘ loopholes’ which relate to international businesses’ operations in the UK.
Stephen Gregson, corporate finance director at Moore and Smalley