IoD press release Investment relies on government creating a positive climate for business

“Security, health and defence rightly take centre stage in this Spending Review. Security and stability are fundamental pillars for growth. IoD members were also keen to see a focus on addressing waste and inefficiency. So, it was good to see confirmation of a minimum 16% real terms reduction in administrative budgets by 2029-30 and 5% efficiencies targets for 2028-29. Given the pressures on public services, it makes sense for these savings initially to be earmarked for delivery. We would expect over time for savings to be used to bring down the tax burden from its post-war record.

“Infrastructure investment has been rightly prioritised. The allocations to regional transport, nuclear energy and R&D from the capital spending budget are sensible and largely aligned with the priorities of business leaders. But public sector net capital investment is set to fall by 0.6% per year in real terms over the Spending Review period. If the private sector is to be ultimately responsible for delivering the renewal of the UK economy, a strong and coherent plan to drive business investment is needed. Increasing the capacity of the British Business Bank to lend is an important step. And the forthcoming Infrastructure and Industrial strategies will enhance policy stability and enable businesses to plan. However, the broader business environment needs addressing: the tax and regulatory system, employment regulations, energy cost competitiveness, and our connections with global markets are all fundamental to creating the conditions for investment.”