UK needs action, not words, on post-Brexit industrial policy

ACCA, (the Association of Chartered Certified Accountants) calls for decisive leadership on regional growth and robust support for services as Brexit vote hits economy

Following a consultation with senior members in the UK, ACCA argues that after years of talking up growth strategies, the threat of recession following the Brexit vote means that the UK cannot risk playing catch-up on major economic projects.

Anthony Walters, head of policy at ACCA said;

‘ACCA firmly welcomes the Government’s plans to drive regional growth. But the rhetoric around devolution and the Northern Powerhouse has been echoing around Whitehall for several years now, what we need now is action. Despite the Government’s drive behind regional development, some big questions remain unanswered. The absence of a decision on a major airport expansion, for example, adds to the list of uncertainties facing investors. 

With ambitions for booming regional economies that are strongly interlinked nationally and internationally the lack of a decision on airport expansion means that we’re missing a key piece of the jigsaw puzzle – and now is not the time to be playing catch-up.’

According to ACCA, the new Government also needs to appreciate that stability in the finance sector is a major national issue which stretches beyond London, says Anthony Walters,

‘Financial services are a major employer across many major UK cities. We need to do all we can to make sure this sector continues to thrive. ACCA members have called upon the Prime Minister to ensure that the UK can preserve existing passporting arrangements for the financial services industry. Should firms lose this benefit associated with being a member of the EU then it is likely that there will be an exodus of financial services firms from the UK – not just from London, but from Edinburgh, Manchester and Cardiff also.’ 

Anthony Walters argues that such decisive action is more urgent than ever as the significant economic impacts of the Brexit vote become clear,

‘Last week’s data has shown a contraction in UK manufacturing and construction. House prices are cooling and the National Institute of Economic and Social Research has said there’s a 50/50 chance of the UK hitting a recession in the next 18 months. 

In response to this latest data the Bank of England did what many saw as inevitable since Brexit and cut the interest rate to a record low of 0.25%, whilst simultaneously releasing a package of economic stimulus. Beyond this the BoE also slashed its growth forecast for 2017 from a robust 2.3% to sobering 0.8%.’

ACCA also urges government to recognise that tackling the skills gap is essential to the success of any future growth strategy, says Anthony Walters:

‘The creation of thriving regional and national economies will rely heavily on access to highly skilled people. We’re not there yet and we will only get there if we begin to develop strong talent pipelines that provide the skills needed to drive future growth and productivity. To achieve this we need Government to work closely with industry, the professions and learning institutions to create a joined-up strategy that delivers.’