THIS week is a big one for both the City and the country as a whole. On Thursday, the City of London elections will offer registered voters across the Square Mile the chance to have their say. And on Wednesday, the chancellor will stand up at the despatch box to outline a Budget that aims to drive job creation and economic growth across the UK.
Both events are important in their own ways. It should be recognised, however, that the outlook for the City is inextricably linked to the broader economic picture across the UK – and vice versa.
Budgets are often best remembered – fairly or not – for the proverbial rabbits pulled out of the chancellor’s hat. In reality, however, the most effective policy approach is to provide a sense of stability and continuity. After all, the last thing that businesses making long-term investment and location decisions need is an unpredictable operating environment.
Having said that, one rabbit the City would welcome being pulled from George Osborne’s hat is wider and faster infrastructure development. We cannot afford to stand still while our rivals build for the future, so it is imperative that we channel investment into transport, power, water, and waste disposal networks to keep pace in the global race.
Recent reports that Qatar is looking to invest a substantial amount in UK infrastructure are positive, but policymakers need to take the difficult decisions needed to make projects “shovel-ready” and attractive to investors and contractors alike.
Airport capacity in the South East is particularly pressing. A new sustainable policy framework for UK aviation, looking at short and medium-term solutions for air capacity within a longer-term strategy, is needed urgently in order to maintain London’s and the UK’s competitive position. Kicking the decision into the long grass only inhibits the international trade and inward investment the UK needs.
Clearly the government recognises the benefits of long-term vision, as demonstrated by the direction of travel on corporation tax. Despite recent controversy on this issue, the gradual shift in the tax rate towards being the most competitive in the G20 has provided tangible evidence that we are open for business.
It is important to remember that major multinational organisations play a crucial role in supporting the UK economy by employing thousands of people directly and via their supply chains. And, of course, their total tax footprint includes sales, employment and other taxes.
In difficult times, these internationally-mobile firms in the City and beyond have a major role to play in driving the recovery forward. That is why I hope that the Budget will encourage the infrastructure investment and entrepreneurial spirit needed to benefit not just the City, but the country as a whole.
Mark Boleat is policy chairman at the City of London Corporation.