As Halloween approaches, every economist is predicting that the Chancellor’s Autumn budget will bring with it many more tricks than treats.
Indeed, Rachel Reeves finds herself in a nightmare scenario, which includes an alleged £50bn black hole in the nation’s finances, alongside higher borrowing costs and employers still reeling from her £25bn National Insurance rise.
The government spin machine has been in full throttle in recent weeks, with the Sunday newspapers providing well sourced stories about the levers the Chancellor can pull to balance the books. Inheritance thresholds, loopholes for doctors and solicitors as well as potential rises in VAT and council tax have been mooted.
It’s not unusual for elected officials in high office to blame world events for their predicament. In previous pickles, Reeves has blamed the Tories, Trump tariffs and now Brexit for the shortfall in the nation’s finances. However, every government learns the hard way, that the longer they remain in office, the harder it is to pass the buck on big decisions.
In an effort to demonstrate fiscal prudence, The Chancellor has launched an eye-catching new initiative, dubbed the ‘blitz on bureaucracy’. The scheme is designed to slash red tape by nearly £6bn by the end of the parliament, driving innovation and kick-starting growth.
The Chancellor says: “We are backing Britain, backing British businesses to thrive and grow and as part of our Plan for Change, these changes will boost jobs and grow the economy right across the country,” she says, but can we trust her?
One of the biggest benefits of rolling back regulation and removing red tape is allowing Britain to truly become an AI superpower.
The business case for doing so is clearly there, with official figures showing a record £2.9 billion invested in British AI companies last year, which equates to average deals worth £5.9m.
For a Chancellor in an urgent drive for economic growth, the facts seem compelling. British AI companies now contribute an estimated £11.8 billion to the UK economy a 50% increase on the figures reported in 2023. On top of this, the industry provides direct employment within 86,000 jobs across all areas of the country, unlocking growth in deprived areas.
The regional case for AI investment is also compelling, with jobs market data showing there are now double the number of AI companies based in Wales, the North West and the Midlands than in the previous year.
As the Chancellor plans new ways to balance the books, the answer lies not in raising taxes to sky high levels but instead driving up revenue through innovation and growth. If income tax is the biggest driver of tax receipts, then get more people into work by turbocharging the AI industry.
AI isn’t the enemy, and it’s here to stay. Forward thinking governments will embrace it and use it to accelerate and spread prosperity. The time for action is now, so let’s get going.
Steven George-Hilley is the founder of global comms agency Centropy PR
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