LONDON - The British government announced fresh investment in research and development on Monday, ahead of the first post-Brexit budget which is expected to signal a move away from the previous administration’s rigid fiscal targets.
The government will increase research and development spending worth £2 billion ($2.5 billion) annually until 2020, Prime Minister Theresa May’s office said in a statement.
Investments will be rolled out through a new fund which will prioritise technologies including robotics, industrial biotechnology and medical technology.
May is due to further outline her plans later on Monday at the annual conference of the Confederation of British Industry, during which she is expected to announce a review of tax breaks which could see greater incentives for businesses to invest in research.
Ahead of the conference, the premier on Sunday said her government would push its new "industrial strategy" while also remaining committed to reducing Britain’s budget deficit.
"This government will continue the tasks of bringing the deficit down and getting our debt falling so that we live within our means, while doing more to boost Britain’s long-term economic success," she wrote in the Financial Times.
Loosening Britain’s fiscal straightjacket
But the treasury has hinted at a loosening of Britain’s fiscal straightjacket, introduced by former finance minister George Osborne who resigned following the UK’s June referendum to leave the European Union.
His successor, Philip Hammond, will on Wednesday announce the autumn budget which will be his first set-piece since replacing Osborne.
Under previous prime minister David Cameron, Osborne oversaw an austerity programme of spending cuts and tax rises at odds with May’s views on the economy which she has said no longer works for everyone.
Hammond will promise to place "investment in infrastructure... at the heart" of the autumn statement to lawmakers, according to a treasury statement released on Sunday.
"He will set out how the government will fire up the nation’s economic infrastructure -- all part of plans which form the backbone of ongoing work to close the UK’s productivity gap," it added.
Osborne’s austerity policies had intended to eliminate the budget deficit following the global financial crisis.
But he scrapped his objective of producing a budget surplus by 2020 in July after May -- in a speech launching her bid to become prime minister -- said the policy should be dropped.
"Hammond will set out a new fiscal framework, outlining the need for flexibility to allow government to respond to changing economic conditions," the statement added, ahead of the budget which will be announced exactly five months after the referendum backing Brexit.
Hammond told the BBC’s Andrew Marr Show on Sunday that the government was committed to tackling the country’s "eye-watering" deficit.
The budget will be the first indication of how Britain plans to adjust its economy to account for Brexit.
"Many forecasts points to a slowing of economic growth next year and a sharp challenge for the public finances," said Hammond.
"We need to be match fit for the opportunities and challenges."
The Sunday Telegraph said Hammond planned to balance the books by taxing job perks given to middle-income earners, such as mobile-phone contracts and gym memberships. — AFP