Many of the chancellor’s announcements will only bear fruit in the longer term. Whether that is in time to save the Tories at the next general election remains to be seen

Simon Rawlinson New

The most important announcement for the construction industry in Jeremy Hunt’s Budget yesterday was confirmation that capital expenditure would continue to be frozen in real terms in the next spending period. Spending will remain historically high, but it will fall each year. 

The faster that inflation falls, the more money there will be to spend in the next Comprehensive Spending Review. Buried within the Budget was an announcement that the publication of the Infrastructure Pipeline has been further delayed, “until later in 2023”. This delay will not build confidence.

>> Also read: Budget 2023: all our coverage in one place

There was better news from the OBR. It remains upbeat with respect to jobs and employment, which should translate into much better prospects for demand from the private sector. 

This could be encouraged further by a generous and simple capital expensing scheme replacing the super-deduction which will help to make the UK a more attractive location in which to invest. 

Levelling-up rightly received a lot of attention, which is fine, so long as the funding is spent. The announcement of 12 new Investment Zones backed by £80m each is likely to make location decisions even harder for UK investors, given that the new zones will be competing with 48 Enterprise Zones and 10 Freeports.

The Budget contained a complex set of announcements, many of which will only have real impact in the longer term

The link with universities was a good idea but the chancellor’s best announcement by far was the extension of the City Region Sustainable Transport Settlements. Extending them by a further five years with a further £8.8bn makes them sustainable in the true sense of the word.

>> Also by Simon Rawlinson: Starmer must make sure he is not embarking on a mission impossible

The Budget contained a complex set of announcements, many of which will only have real impact in the longer term. It demonstrates a shift from recovery to reset. Whether the benefits will be seen in time to turn the electoral tide remains to be seen, but the chancellor definitely gave the impression that he is enjoying his role.

Simon Rawlinson is a partner at Arcadis and a member of the Construction Leadership Council

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