What does the Budget mean for leasing?
The budget delivered by Philip Hammond on Wednesday 22 November was set against a backdrop of some fairly gloomy economic forecasts. The independent Office for Budget Responsibility (OBR) whose function is to provide the economic forecasts on which government policy is based, downgraded their previous expectations about the future performance of the economy and now predict that UK GDP will not return to its long term growth rate of 2% per annum until well into the 2020s.
The prediction of a slow growing economy with an associated shortage of tax revenues to fund public services limited the amount the Chancellor could spend in his recently presented budget.
Whilst the sums involved might not be considered huge, Hammond did announce an increase in spending in certain areas which should have the potential to offer new leasing opportunities and in particular give notice as to where suppliers of capital equipment might direct their future efforts.
The following are areas which might be of interest:
1. Devolution – the budget confirmed a clear direction of travel involving the regions of England and the devolved assemblies assuming ever greater control of money spent within their areas. This is particularly the case where English mayors have been elected. Suppliers of capital equipment might well find negotiations easier with local decision makers than Central Government and as such might be able to identify new sales opportunities.
- 2. New Businesses – start-up companies have been promised government support to unlock at least £20bn of investment over ten years. Amongst the measures introduced is the creation of a new investment fund in the British Business Bank where guaranteed public money is designed to encourage private investment, including potentially unlocking some of the billions of pounds held in pension funds. This, and other measures, are designed to accelerate the formation and growth of innovative start-ups. Better funding for new businesses will enable investment in the capital equipment required to generate the productivity required to achieve their business objectives.
1. House Building – a number of initiatives were launched at an overall cost of £44bn to accelerate the rate of house building from its current rate of 217,000 completions per year to 300,000 by the middle of the next decade. This will have a positive effect on all businesses operating within the private house building sector.
- 2. Infrastructure – significant sums of money have been pledged to the devolved assemblies of Wales and Northern Ireland as well as the Scottish Parliament which will accelerate spending on infrastructure. In addition more than £2bn was committed to transport schemes in the North and Midlands of England.
Technology and Transport
1. The apparent certainty that the pace of migration to electrically-powered self-driving cars is likely to accelerate rapidly in the near future facilitated a number of tech-related initiatives being included within the budget. The Chancellor committed to invest £500 million to promote development in artificial intelligence, 5G and full fibre broadband. Better communication infrastructure will open up new possibilities, not just for those directly involved with driverless cars, but also for the sale of any capital equipment which takes advantage of ‘state of the art’ technology.
- 2. Initiatives to ensure a rapid UK-wide expansion in the number of electric vehicle charging points will overcome one of the main constraints to the further acceleration in the growth of these vehicles. This will provide earlier sales opportunities for all those involved in the supply chain of this technology.
The conclusion therefore is that although the anticipated rate of economic growth might be a constraint on the general level of business activity in the next few years, there were a number of initiatives within the budget that will provide new sales opportunities for those prepared to look.
Andy is an experienced sales and finance professional with over 25 years’ experience in sales aid leasing. Andy is widely recognised as an expert in business finance and has in recent years focused his attention on developing partner sales teams develop an understanding of how businesses secure project financing. His training programme – Finance Unlocked – is a highly rated customisable course and is offered at no cost to partners.
If you’re interested in helping your sales team overcome finance-related hurdles during the selling cycle, please get in touch with Andy on 07966 114 243 or email here.