Introduction
The Autumn Budget 2024 introduced a significant and sustained increase in spending, taxation, and borrowing. Over the next five years, budget measures are projected to add nearly £70 billion annually, with around two-thirds directed towards current expenses and one-third allocated for capital investments.
The Chancellor has announced various initiatives aimed at enhancing investment while modifying the government’s fiscal rules to emphasise stability and growth.
Economic Outlook for the UK
The Office for Budget Responsibility (OBR) forecasts a modest UK economic growth rate of slightly over 1% this year, rising to 2% by 2025, before levelling at around 1.5%—just under the estimated potential growth rate of approximately 1.67%.
Inflation is projected to reach 2.6% in 2025 due to Labour’s budget policies, before gradually returning to the Bank of England’s target of 2%. For the upcoming fiscal year, all government departments will have a 2% target for productivity, efficiency, and savings, with technology playing a vital role in achieving these objectives. An anticipated rise in employer National Insurance contributions is expected to impact business investments
Tech-Focused Budget Announcements
Cross-Government Review on Technology:
A review will address barriers related to transformative technologies that drive innovation and productivity. The outcomes will inform the industrial strategy and sector plans in the upcoming Spring 2025 spending review.
Encouraging Digital Adoption in SMEs:
A £4 million pilot package will support small businesses with e-invoicing and a renewed Digital Adoption Task Force, with a consultation planned for early 2025. The objective is to improve digital record-keeping and productivity, enabling real-time economic insights.
Modernising HMRC’s IT Systems:
Investments will upgrade HMRC’s IT and data systems to enhance productivity and customer service, creating a more efficient tax system for both businesses and individuals.
Extending the Innovation Accelerators Programme:
Funding for high-potential innovation clusters in regions such as Glasgow, Greater Manchester, and the West Midlands will continue, aiming to build globally competitive tech hubs across the UK.
R&D and Corporate Tax Reliefs:
The government has pledged to maintain core R&D budgets, with real-term funding increases supporting sectors such as the NHS, life sciences, and technology. The Corporate Tax Roadmap outlines provisions for capital allowances and provides clearer guidance on full expensing to encourage business investment in technology and innovation.
Investments in UK Tech Sectors:
The government plans to invest £1 billion in aerospace, £2 billion in automotive to support electric vehicles, and £500 million for life sciences. Government R&D spending will reach £20.4 billion in 2025-26, including £6.2 billion for sectors such as engineering, biotechnology, and medical science. In addition, £3.4 billion will support the Warm Homes Plan to lower energy costs and improve building efficiency. An increase of £2.9 billion has also been allocated for military spending in 2025, alongside funding for World War II tributes.
Clarifying Capital Allowances for Computer Software:
This roadmap provides clarification on capital allowances to aid businesses in making investment decisions, including further guidance on the treatment of computer software.
Additional Announcements
- Increased Capital Investment:
Over £100 billion will be allocated to public services, including NHS expansion, school funding, prison improvements, and road maintenance.
- Changes to Employer National Insurance Contributions:
The National Insurance rate will increase by 1.2 percentage points to 15%, with Employment Allowance adjusted to £10,500 and the Secondary Threshold reduced.
- National Living Wage Increase:
The wage will increase by 6.7%, rising from £11.44 to £12.21 per hour.
- Expansion of the National Data Library:
This new resource will improve public data access for research and business, promoting ethical and secure data use.
- Support for Electric Vehicles:
EV incentives will continue through the Company Car Tax system, with allowances for zero-emission cars and charge points extended by an additional year.
Conclusion
In summary, the Autumn Budget 2024 reflects a commitment to economic stability, growth, and investment, with particular emphasis on tech-driven initiatives. The Budget underscores the importance of technology and innovation as engines of economic resilience, with targeted investments and policies aimed at building a robust, digitised economy across various sectors. For more information visit GOV.UK.
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