Chancellor missed a chance to link innovation, net zero and levelling up, says Anna Valero
Chancellor Rishi Sunak’s autumn budget painted an upbeat view of the economy. Improved forecasts have left the Treasury with more money than expected. The decision to spend rather than cut taxes should help to repair public services that were under strain even before the pandemic.
But the UK needs to take stock of its challenges. The Office for Budget Responsibility predicts that the pandemic and Brexit will reduce long-term output by 2 per cent and 4 per cent, respectively. Productivity has been weak for over a decade, and growth is forecast to be just 1.3 per cent in 2024 after the initial rebound from Covid-19. Restoring productivity growth is the only way to sustainably raise living standards and avoid the threat of an inflationary spiral.