Chartered Institute of Export & International Trade public affairs lead Grace Thompson takes a deep dive into the details on last week’s Budget announcement, exploring what it could mean for UK trade and growth.
The Autumn Budget ‘red book’ stands at an impressive 170 pages long and, even a week later, stakeholders are still digesting it.
Strategies and trade-offs abounded in the Budget – fitting for chess-playing chancellor Rachel Reeves. In chess, a gambit is a type of opening where a player sacrifices specific chess pieces in order to gain a longer-term strategic advantage. And as she launched her first Budget as chancellor, Reeves will have been hoping that anything she sacrificed in the Budget would be counteracted by the gain from the investments she is putting in place elsewhere. Here are just a few of those investment areas which she has chosen to prioritise.
Nations and Regions
Growth within nations and regions was a key priority of the Budget. Alongside the usual targeted funding for devolved governments, there was – unsurprisingly - an investment of £0.72m to establish Brand Scotland, a programme run out of the Scotland Office in order to promote Scottish investment opportunities and exports around the world. This was a clear priority for Ian Murray MP whilst in Opposition and he is being swift to make it a reality in his role as Secretary of State for Scotland.
Looking to Wales, freeports are perhaps an unexpected element of the Budget, as Labour’s stance on freeports wasn’t always clear. However, prime minister Sir Keir Starmer noted recently that, despite the freeports programme being inherited from the previous government, his government would ‘maximise their potential’ and put his ‘government’s stamp on them’.
Five new customs sites will be designated within existing freeports, including Celtic Freeport in South Wales. This means that businesses should be able to start to benefit from tax reliefs on new investment and employment in those sites in November.
Northern Ireland’s investment package, as with the other countries of the UK, includes investment on City and Growth Deals. However, there is specific attention given to the supporting of economic growth in Northern Ireland’s rural regions.
English regions will also see a range of benefits, including integrated settlements for a number of Mayoral Combined Authorities and investment in specific projects, such as the approval of the East Midlands Investment Zone and £25m funding for the North East Mayoral Combined Authority (NEMCA).
NEMCA plans to use the funding to remediate the Crown Works Studio site, which will support the North East’s creative industries and is expected to lead to around 8,000 new jobs in the region. In our 2023 report with Flint Global, we identified the importance of creative industries – including tourism and film – as part of gauging regions’ services export potential.
Strategies
UK-wide strategies were highlighted as the means of economic development of growth-driving sectors. The ongoing work around the Industrial Strategy and Trade Strategy (both to be published in Spring 2025) were already common knowledge in the international trade world, but a new Small Business Strategy Command Paper was additionally announced in last week’s Budget. This Strategy is due to set out the government’s vision for small businesses and will complement both the Industrial and Trade Strategies.
While still in Opposition, Labour had commissioned the Federation for Small Businesses (FSB) to run an SME Export Taskforce, of which the Chartered Institute of Export & International Trade was a member. The joint recommendations of the Taskforce were published earlier this year, and are a great starting point for considering inputs to both the upcoming Trade and Small Business Strategies.
Technology
Digital trade, in its many forms, is recognised as the future of international trade. One key part of this is enabling small businesses to take advantage of digital advances. In order to support more small businesses’ digitisation efforts, the Budget extended the SME Digital Adoption Taskforce, which will produce an interim report early in 2025.
Significantly, the Department for Business and Trade (DBT) will also soon announce details of a £4m pilots package to encourage tech adoption for SMEs.
This indicates the government is in ‘listening mode’, particularly given the recommendations of a Social Market Foundation paper published in September 2024 with the E-Commerce Trade Commission, which the Chartered Institute chairs.
The paper recommended that the government encourage the adoption and intensification of the use of trade tech by SME “considerers” and exporters. This implementation was suggested through boosting the amount of digital advice made available through DBT export support services and introducing grant funding for investment in trade tech for up to 70,000 “considerers”. The announcement on the pilots package will go some way to supporting SME exporters to adopt beneficial technology.
Strategic Investment
Beyond technology, the government is also seeking to intentionally invest in key areas, with the settlement for DBT supporting the attraction of foreign direct investment and driving money into the DBT overseas network to promote UK trade and investment all over the world.
The move to install Poppy Gustafsson, former Darktrace CEO as Minister of State for Investment was an incredibly smart one, echoing a few other ministerial hires direct from industry The Budget red book emphasised that her remit will roll out a new, bespoke service to ensure that investors receive the strongest possible government support.
Finally, UK Export Finance (UKEF) will now also be able to provide financial support to UK companies supplying critical minerals to UK exporters in high-growth sectors such as EV battery production, clean growth, aerospace, and defence. These are seen as key areas for investment and strengthening supply chain resilience.
Skills
Every chess match has an endgame, and the best players can see several moves ahead to steer the pieces to where they need to be for the final outcome.
Skills is one of the endgame moves for the chancellor, the driver of future productivity. As she noted during the speech:
“Successful businesses depend on successful schools.”
A £300m investment for further education was announced to ensure young people are developing the skills they need to succeed.
Particularly welcome was an announcement that government will also take steps to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy by investing £40m, which will help to deliver new foundation and shorter apprenticeships in key sectors.
With the Chartered Institute making representations on skills (and apprenticeships in particular) in both our representations to the chancellor and our Policies for Progress paper earlier this year, movement on investment in skills and the reform of the levy are particularly welcome.
Skills England, the body which brings together key partners to meet the skills needs of the next decade, will be consulting with partners to ensure that levy-funded training meets the needs of all who utilise it.
The long-term strategy
In professional chess, the clock runs down – and quickly. It is clear from the Budget last week is that this is a long-term strategy for stable growth. The gambit here is that, for many businesses and individuals feeling the strain currently, stable growth can’t come quickly enough. Industry partnership is therefore emphasised in many communications, in order for government and industry to work towards the long-term endgame together.
We at the Chartered Institute are also a part of this endeavour, as we seek to engage meaningfully with government (and wider political stakeholders) on all matters of relevance to our members. If you have a particular policy issue you would like to raise, please do email publicaffairs@export.org.uk.
If you would like to read more about the Autumn Budget in more detail, please click here for the full document.