(Bloomberg) -- Chancellor of the Exchequer Rachel Reeves’ first budget has been greeted with cautious optimism by Britain’s business leaders, though higher taxes on wages held them back from a full-throated endorsement.
In a series of interviews and comments sent via email, executives across a wide range of industries in the UK gave their take on the finance minister’s budget.
The budget will raise taxes by £40 billion ($51.5 billion) and promises sweeping investment in public services and infrastructure, resulting in “one of the largest increases in spending, tax and borrowing of any fiscal event in history,” according to Richard Hughes, the head of the government’s budget watchdog.
Business leaders were relieved that even more stringent tax hikes didn’t materialize, and welcomed investment in areas across the car industry, homebuilding and clean energy.
Anne Glover, Amadeus Capital Partners CEO
The venture capital firm boss said the Chancellor’s biggest achievement was to manage expectations ahead of what was always going to be a difficult budget.
“What really matters now is making it easier for entrepreneurs to set up and grow their companies in the UK, particularly deep tech early stage and growth companies which will become the backbone of the industries of the future,” Anne Glover said.
The government should consider encouraging or mandating that pension funds diversify their stakes into riskier assets if it wants to improve investment in technology, she added.
Andy Palmer, Pod Point Group chairman
Andy Palmer, the former chief executive officer of Aston Martin Lagonda Global Holdings Plc, welcomed the £200 million investment to speed up the rollout of more electric-vehicle charging points.
“I would have hoped for more but it’s in the right direction at least,” said. “I thought the fact that the fuel duty wasn’t raised was a missed opportunity. I understand it’s politically sensitive, but I felt there was an opportunity there to raise cash to put more into EVs.”
Nick Mackenzie, Greene King CEO
Pubs face tough decisions around investment, prices and hiring given the layering of “substantial” costs next year, the pub group’s CEO said.
“While a reduction in draught duty is welcome, in reality it is a drop in the ocean compared with the cost impact of lowering the threshold for national insurance contributions and increasing the rate paid by employers,” Nick Mackenzie said.
Mark Booth, Hayfield chairman
The chairman of the home developer said this was an “encouraging” first budget, but the lack of an extension to the stamp duty holiday will hit first-time buyers when they need all the support they can get.
Commitment to hiring and training more planning officers is a good start, he added, but clear plans are needed to ensure these reforms aren’t undermined by councils’ wider lack of funding.
Andy Briggs, Phoenix Group CEO
Andy Briggs welcomed the government’s investment alongside the private sector, saying it will be “critical” for boosting growth. Changes to the fiscal rules “make economic sense if implemented in the right way,” and may allow private and government capital to work together to “catalyse” investment in infrastructure.
Kelly Becker, Schneider Electric’s UK & Ireland president
Kelly Becker would have liked to see a few more commitments on supporting the manufacturing supply chain and a clearer road map for decarbonizing both the commercial and industrial sector.
She also questioned whether national insurance hikes would have the expected impact. “UK manufacturers are really struggling to hire skilled laborers where we’re competing in a very global economy against the EU and the US,” she said. “I have to ask how increasing the cost of employment for businesses is going to help us deliver that prosperity.”
Paul Taylor, Thought Machine CEO
The increase in national insurance contributions will add £800,000 to the cloud banking technology company’s payroll in the UK, Paul Taylor said.
“Nearly all emerging tech businesses run on investor capital, and this increase sets them back on their path to profitability,” he said.
He said changes to capital gains taxes will discourage talent from taking a risk to work at unprofitable startups.
Jason Da Silva, Arbuthnot Latham investment director
It will be “quite tricky” for Labour to prove that the extra borrowing was a worthwhile investment, as it will probably take a long time for the benefits to materialize, Jason Da Silva said.
“It’s a lot of spending upfront, and hopefully in year two or three that starts catalyzing GDP growth, but if for whatever reason that doesn’t happen, then that could be a very difficult situation to deal with.”
Until the consequences for the larger economy become clearer, businesses might feel a little spurned. “Labour’s been talking of being pro-business, but then the biggest tax increase in this budget has been on businesses. So it’s kind of giving with one hand and taking from the other,” Da Silva said.
John Ions, Liontrust CEO
The CEO of the asset manager said he felt a “great deal of relief” after hearing mixed messages going into the budget. “International investors probably look at the UK as a slightly better place to invest now,” he said, noting that UK equities look cheap versus other markets and provide a hedge against the US and Big Tech.
“It was a fairly benign budget,” John Ions said. “After what’s been a few tumultuous years, from an investor point of view, they just want to see some stability and clarity.”
--With assistance from Philip Aldrick, Aisha S Gani, Charles Capel, Damian Shepherd, Louise Moon, Mark Bergen and Jamie Nimmo.
©2024 Bloomberg L.P.