Rishi Sunak’s Spending Review “missed an important opportunity” to develop industries of the future, warns the CEO of one of the world’s largest independent financial advisory organisations.
The warning from Nigel Green, the chief executive and founder of deVere Group, follows the UK Chancellor on Wednesday setting out government spending plans and latest economic forecasts.
Speaking in the House of Commons, Mr Sunak said the UK’s GDP is to contract by 11.3% this year, the biggest drop in more than 300 years.
Borrowing is expected to reach £394bn for the current fiscal year, which is the highest recorded level of borrowing in peacetime.
Mr Green says: “The Spending Review was a sobering statement. The figures and projections are simply eyewatering.
“With the UK economy due to experience the sharpest contraction since the Great Frost of 1709, at 11% this year, and with unemployment expected to peak at 7.5% in the second quarter of next year, the government is on course to spend £280bn this year and £55bn in 2021 to tackle the pandemic.”
He continues: “Clearly, these are unprecedented times which demand unprecedented sums of money.
“But whilst the Chancellor’s plans to increase spending on important things like infrastructure are welcomed, longer term planning is needed to develop new industries.
“To get ahead of the current dire economic situation, we need investment into industries of the future – and it appears that Sunak missed an important opportunity in this regard in his Spending Review.”
Mr Green goes on to say: “How we live, do business and interact remains fundamentally changed since the pandemic.
“It is highly unlikely that the world will go back exactly to how it was pre-Covid – there are many aspects of the ‘new normal’ which people like and support, such as working from home and the increasing use of apps for everyday tasks.
“As such, some of the major societal and economic shifts are unlikely to be reversed.”
For these reasons more attention must be paid “to the future economy, not that of the past” says the deVere Group boss.
One area the Chancellor should have highlighted is financial technology, or 'fintech.'
“Fintech is already monumentally reshaping and redefining the way in which all financial services, including banking, across the board are delivered.
“This megatrend is only going to grow in the coming years due to the convenience, freedom and flexibility it offers consumers, coupled with the blistering pace of digitalisation throughout the world.
“Fintech is the future of financial services, which makes up 6% of GDP in the UK. Why did the government not capitalise on this? Especially when Britain is already a global leader in the sector.”
Mr Green concludes: “The Chancellor’s efforts to get through the crisis are noble but more financial commitments must be made sooner rather than later for industries of the future, not only those of the present and of the past.”