Despite the difficult financial backdrop, the Budget contained many good measures, such as extending the fuel duty freeze, the energy price guarantee and finally expanding free childcare. However, the hard work lies ahead. The fastest economic growth among the G7 since 2010, strong inward investment and an unemployment rate nearly half the EU average needs to translate into higher living standards. While various other challenges, if not addressed adequately, will continue to restrain the economy's long-term potential.
The Chancellor rightly included financial services among his five key growth areas. The City of London generates more than 10 per cent of the UK’s gross domestic product (GDP). Yet it is under threat and there is concern the ‘Edinburgh Reforms’ do not go far enough to address the problem. The stock market is only part of the Square Mile. But it acts as a ‘gateway’ for other financial services such as trading, derivatives, legal services and insurance. Many symbiotic relationships are not always clear to the eye. A healthy stock market is essential for the good of the whole.
Yet it is ailing. Recent news has included the computer-chip designer Arm and building materials giant CRH (CRH) shunning the City to list in the US. These companies are worth £80bn in total. The exodus across the Atlantic is the latest threat to the stock market. The total market value of London-listed equities has fallen by a third since its peak in 2007, whereas the US market has more than doubled. If there is any doubt, the government should ask itself why so many of our promising green and technology growth companies were banking with SVB.