EFFORTS to kick-start the economy and boost growth continue to dominate the headlines as we approach the Budget next week.
The Prime Minister recently outlined his commitment to sticking with Plan A. In doing so, he highlighted positive signs that the economy is picking up, including increased exports to emerging markets, increased private sector jobs, and a faster rate of new business creation than at any time in history.
Meanwhile, business secretary Vince Cable has suggested that the coalition should borrow more, at this time of historically low interest rates, to increase expenditure on housing and other infrastructure.
Leaving aside the economic merits of these two arguments, it is clear that there is a healthy debate going on within government about how to create jobs and growth across the country.
The City shares this goal of growing all sectors. Trade and industry – the theme of a major dinner at Mansion House last Thursday – will play a crucial role in pushing this agenda forward.
Finance’s key role is to ensure that capital is best deployed in supporting and sustaining growth, especially in the wider economy. That is why we are striving to find new ways of supporting business, especially those that nurture the high growth potential of start-ups and small to medium-sized enterprises. Our Angels in the City initiative, for example, is helping to boost knowledge sharing and angel investment in innovative entrepreneurs across the City fringes, including Tech City.
Another example is the London Stock Exchange’s new high growth segment. This development will help business access the liquidity, resources and expertise of the Exchange that much more quickly.
It is vital that London continues to be at the forefront of providing finance for new and growing markets. On this note, there is scope for the capital to become a global centre for social investment – a market that could be worth £1bn by 2016 – if policymakers create the right framework to support growth.
The City Corporation’s research shows the potentially huge impact of adapting tax reliefs for venture capital and philanthropy to also cover social investments. This simple step could create nearly £500m of new investment in the social sector over the next five years.
This is investment for the long-term – just like the investment the City Corporation makes in our arts cluster around the Barbican. The creative industries are at the forefront of job creation, with a major multiplier effect right across the whole economy.
Long-term investment decisions are inevitably shaped by short-term policy changes. That is why I hope the Budget will set out a positive statement of intent that recognises the City’s vital role in driving growth.
Roger Gifford is lord mayor of the City of London.