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What the UK 2023 Spring Statement means for investors

Our key takeaways from, and reaction to, the Treasury's latest major intervention.

The UK Government has unveiled its latest Spring Statement, focusing on addressing cost of living challenges, levelling up and bringing more people into workforces.

The development follows our Q4 2022 Pulse Survey, direct engagement with the Treasury and an opinion piece in the Times leading up to the statement.

Key takeaways for infrastructure investors include: 

  • A new policy of full capital expensing for the next three years, with the intention to make permanent as soon as the government can responsibly do so - in practice, this means every £1 invested in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.
  • A commitment to return at the Autumn Statement with a plan to unlock investment from defined contribution pension funds and a response to challenges created by the US Inflation Reduction Act. 
  • A commitment of up to £20bn in support for development of carbon capture, storage and utilisation capacity to help attract private investment.
  • A consultation on classing nuclear power as environmentally sustainable, enabling investors in the sector to access the same investment incentives as they would if investing in renewables.
  • Plans to launch a Great British Nuclear agency and the first competition for Small Modular Reactors (SMRs) – if demonstrated as viable, the government will co-fund this technology.
  • Delivery of 12 new investment zones, with areas earmarked in England including the West Midlands, East Midlands, Liverpool and Greater Manchester.

Responding to the announcements, GIIA CEO Jon Phillips said: “There are commitments in this Statement that will go some way to bolstering investor confidence in the UK after a sharp drop off in international sentiment last year.

“The instatement of full capital expensing has rightly avoided a cliff-edge moment with regards to the super deduction incentive. However, given project delivery typically takes a good deal longer than three years, this move should be made permanent as soon as possible to provide necessary certainty for investment decisions.

“An ambitious plan for nuclear will be welcomed by some investors, while the Chancellor’s £20bn commitment to fund development of carbon capture, utilisation and storage capacity has the potential to spur investment in that much-needed technology.

“That said, a six-month wait for a response to the US Inflation Reduction Act risks dampening investment in UK infrastructure, especially with the EU now developing its own Green Deal Industrial Plan. The government should ramp up engagement with investors prior to the Autumn Statement to ensure that its response is sufficiently ambitious.”