Budget response: No mention of productivity

Categories: Salford Business School

Chancellor Rishi Sunak today unveiled his budget, designed to help the economy recover from the effects of covid-19. But finance and economy expert Zeeshan Syed, from the University of Salford Business School, says there was a glaring omission, with no mention of productivity.

Zeeshan said: “This budget needed to be the most impactful since WWII because it had to lay out the plan for restarting growth and competing with the EU, a new competitor. Rishi tries to address both challenges by announcing policies such as more funding for existing businesses, ease of access to grants, the extension of the furlough scheme, incentives to recruit more people, and investment in Fintech.

“These interventions are needed, but two things that matter most seem to be under-addressed. One is that it does not provide a way forward for long-term stability, and second, it does not admit enough that we are the second-lowest nation in terms of productivity among G7.

“For the first, the Chancellor postponed the corporate tax raise to 2023, and it will delay firms’ relocation and protect jobs. But come 2023, firms may consider relocating to Ireland or elsewhere again, where companies can have the best of all worlds. Further, if we want savers and consumers to spend their money, then we need to give them the confidence about their jobs now, not in 2023.

“The latter requires incentivising adults to retrain, relearn, and redevelop their skills. The Chancellor wishes to handle this with another scheme, but his first Kickstart scheme could not do the job. A better solution could be to entrust universities to train our young and adults and lead the nation out of the low productivity crisis.

“Let’s hope he has another plan.”     

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