In Budget 2012, George Osborne has followed much of the course set out in the 2011 Autumn Statement. The critical importance of the National Infrastructure Plan for UK development was reinforced, together with the importance of private finance to its success. The progress made with 12 pension funds helps give confidence that the enablers behind the NIP have not been forgotten.
With his focus squarely on reducing the UK’s debt and reinforcing the country’s reserves, the Chancellor appears determined to ensure that the UK retains its AAA credit rating. This message is good for the country’s global competiveness as it presents itself as a safe haven for investment when compared to our competitor countries, especially elsewhere in Europe.
The Budget contained a number of longer term strategic moves to support growth, including continued investment in science and aerospace, data backbones and greater penetration of broadband across the country. When combined with the investment incentives for TV, animation and other technology industries, the Chancellor is establishing the UK as a “wired in” country and an internationally recognised creative hub.
In our view the Budget adopts the relatively neutral stance to be expected from a Chancellor constrained by public debt, although there were encouraging signs in the various policies announced for stimulating business, including the reduced corporation tax and investment in new industries.
What still remains to be determined is how the National Infrastructure Plan will be delivered in practice, especially at a time when investors have many alternative markets across the world. This places even greater importance on the PPP reforms still to unfold over the coming months as well as maintaining that AAA credit rating.
It also good to see that the Government is leveraging the lessons learned from the privatisation of the water industry – a cause we too have welcomed.