Tech industry expresses concern over UK’s slow growth forecasts
Chancellor Philip Hammond today revealed upgraded growth projections for the UK’s economy, amid renewed tech pledges for 5G funding, tech skills, broadband and more.
But the tech sector reacted with concern at economic growth of just 1.7% in 2017, and at news that the Office for Budget Responsibility forecasts that growth will fall to 1.5% (up from an earlier prediction of 1.4%) this year, before dropping to 1.3% in 2019 and 2020.
“Forecasts are there to be beaten,” Hammond told the House of Commons this afternoon.
But Antony Walker, deputy CEO of trade industry body techUK, which represents more than 800 tech companies, said: “Many businesses will be concerned that the UK is forecast to grow more slowly than many competing economies around the world. As a result, we need to stay focused on maintaining digital investment to drive productivity and growth.”
The UK’s first Spring Statement – instead of a Spring Budget as in previous years – saw Hammond tout the tech sector’s potential to become a bastion of the post-Brexit economy.
“Our tech sector is attracting skills and capital from the four corners of the Earth,” he said, “with a new tech business being founded somewhere in the UK every hour.”
Hammond reiterated the government’s support for T-Levels, a 2016 initiative to provide qualifications for ‘technical education’, confirming this year’s £500 million tranche of investment.
He also announced that the government will make £50 million available to help employers roll out T-Level work placements. Meanwhile, small businesses struggling to pay the Apprenticeship Levy will get £80 million to make it cheaper for them to take on apprentices.
“The introduction of T-levels may go some way in bridging the skills gap through quality technical education, but it will take time for 16-year-olds to gain real world experience and filter into the workplace,” said Di Mabe, client services director of Microsoft recruitment partner, Curo Talent.
“With £50 million available to organisations to take on T-level placements, I urge businesses to make the most of this opportunity to secure homegrown talent and provide the best in real-world experiences.”
Broadband and 5G
Hammond reconfirmed yesterday’s announcement of another £25 million to fund six new 5G trials, part of the government’s £1 billion Digital Strategy.
The first wave of funding from the Autumn Budget’s £190 million local full fibre investment challenge fund is also now underway, he said. That sees the release of £95 million to build broadband infrastructure capable of gigabit-speed networks in Armagh City, Belfast, Blackpool, Cambridgeshire, Cardiff, Coventry, The Highlands, London, Manchester, Mid Sussex, North Yorkshire, Portsmouth, and Wolverhampton.
“The announcement of the first 50% of money allocated in the November Budget for the rollout of broadband shows ongoing commitment to concrete steps towards the delivery of improved digital infrastructure,” said TechUK’s Walker.
Tax and Brexit
Hammond also said the government continues to explore options for how to tax tech giants like Google and Apple, the latter of which paid HMRC another £137 million in added taxes in January after an audit discovered it had substantially underpaid its UK subsidiary.
On Brexit, the chancellor followed through with his pledge to hand departments money to prepare for Brexit, with £1.5 billion being made available to them for 2018-19.
TechUK’s Walker said: “It’s clear that government departments need to be fully resourced to cope with the complexities of Brexit. Additional funding for HMRC, the Home Office and the Department for Digital, Culture, Media and Sport are particularly significant in building capacity to ensure we meet key Brexit demands on data flows, and the movement of both goods and people.”