Chancellor to use ‘Brexit freedoms’ to tackle poor productivity

• Chancellor Jeremy Hunt will set out a long-term plan for prosperity made possible by Brexit.
• Hunt will make the case against “declinism”, with the UK growing faster than France, Japan and Italy since 2010.
• He will also confirm post-Brexit reforms to unlock £100bn of private investment this decade will be implemented in the coming months.

Chancellor of the Exchequer Jeremy Hunt will today set out his approach to tackle poor productivity and boost growth, using the new freedoms won by Brexit as a catalyst.

Following the Prime Minister New Year address outlining his five priorities which include growing the economy, halving inflation and getting debt down – the Chancellor will speak about how this will be accomplished.

Delivering the speech at Bloomberg’s European headquarters in London, Mr Hunt will caution against an attitude of “declinism” about Britain and set out the case for optimism as the UK aims to play a leading role in Europe and across the world in the industries of tomorrow. Since 2010 the UK economy has grown faster than France, Italy and Japan, and since the EU referendum the UK economy has grown at around the same rate as Germany.

The Chancellor will also confirm that post-Brexit reforms to Solvency II will be implemented in the coming months, which could unlock £100 billion of additional investment into the UK’s most productive assets this decade – such as clean energy and UK infrastructure.

Chancellor Jeremy Hunt is expected to say: “Our plan for the years that follow is long term prosperity based on British genius and British hard work.

“[And] world-beating enterprises to make Britain the world’s next Silicon Valley.”

The Chancellor will also caution against declinism, with the UK aiming to play a leading global role:

“Declinism about Britain was wrong in the past – and it is wrong today.

“Some of the gloom is based on statistics that do not reflect the whole picture.

“Like every G7 country, our growth was slower in the years after the financial crisis than the years before it. But since 2010, the UK has grown faster than France, Japan and Italy. Since the Brexit referendum, we have grown at about the same rate as Germany.

“If we look further ahead, the case for declinism becomes weaker still. The UK is poised to play a leading role in Europe and across the world in the growth sectors which will define this century.”

The Chancellor will focus on key growth industries, including Digital Technology, Green Industries, Life Sciences, Advanced Manufacturing and Creative Industries – areas where Britain has a competitive advantage to build on further.

Mr Hunt will also set out some of the challenges the UK faces, including poor productivity, and set out a plan to long-term prosperity, using the UK’s new-found Brexit freedoms to support growth and entrepreneurship.

In the Autumn Statement, the Chancellor set out the government’s strategy for boosting growth by investing in our people, in the infrastructure that connects our country, by creating the right environment for business investment, and by supporting our world-leading financial services companies and innovators.

To further support investment across our economy, the Chancellor also announced a decision to proceed with reforms to Solvency II – an EU Directive that governs the amount of funds British insurers are required to hold in reserve. The Association of British Insurers suggest the Chancellor’s reforms are expected to unlock up to £100 billion of private investment this decade into UK infrastructure and clean energy, such as nuclear power.

And in December, the Chancellor went further and announced the Edinburgh Reforms – a package of reforms to drive growth and competitiveness in the UK’s financial services sector, while retaining our commitment to high international standards. This included the publication of our ambitious plan for repealing and reforming EU law for financial services.

The Chancellor is also expected to say: “Confidence in the future starts with honesty about the present, and we should not shy away from the biggest challenge we face which is our poor productivity. Our plan for long term prosperity tackles that challenge head on.

“It is a plan necessitated, energised and made possible by Brexit which will succeed if it becomes a catalyst for the bold choices we need to take.

“Our plan for growth is a plan built on the freedoms which Brexit provides. It is a plan to raise productivity. It is a plan to use the proceeds of growth to support our public services at home, to support businesses in the new low carbon economy and to support democracy abroad. It is the right course for our country and the role in the world to which we aspire.”

With a UK tech sector worth one trillion dollars the Chancellor will call on other businesses to consider the UK as a place for investment by tech entrepreneurs, life science innovators and energy companies.

The UK is an attractive location for tech investment; the recently announced digital markets regime aims to open the UK’s digital markets up to greater competition and spur increased innovation across the sector. The regime is an alternative to the EU’s Digital Markets Act – the UK’s proposals are widely regarded as more proportionate, targeted and flexible than the EU’s.

This month PwC surveyed more than 4,400 top chief executives in 35 countries and found that the UK has risen the joint third most important country to invest, behind only the US and China and equal with Germany.