Chancellor Philip Hammond will finally address the startup funding black hole created by the UK’s exit from the European Union in a speech tonight.
In a report last year, BusinessZone investigated the impact Brexit would have on startup funding from the European Investment Fund (EIF) and European Investment Bank (EIB). Britain’s startup scene has benefitted generously from the EU’s largesse.
BusinessZone’s investigation zoned in on one particular stream of funding: the Framework Programme for Research and Innovation (known as Horizon 2020). The Department of Business, energy and industrial strategy (BEIS) revealed this February that the UK had received £21bn since 2014 from this one programme. Private for-profit entities - that is, businesses - received a cool £5bn as of February 2017. In the next funding round the UK will receive £2.2bn.
At the time, a spokesperson for BEIS told BusinessZone that: “The impacts on leaving will depend on a number of factors including the timing of the UK’s exit and the details of our future relationship with the EU, but we are clear that no immediate change is necessary. While we remain a member, the UK continues to pay into the EU and continues to receive funds.”
Now Reuters reports the Chancellor will directly address the issue in a speech at this year’s Mansion House banquet, a white-tie dinner for the UK’s financial elite.
According to Reuters, Hammond will guarantee an increase in the level of financial support it provides to British startups and major infrastructure projects to help the economy during and after Brexit.
Hammond’s plans will be crucial for projects that will run beyond 2019, the deadline for Brexit negotiations to conclude. The British Business Bank will be beefed up to fill the void, according to Hammond.
The speech amounts to a comeback for Hammond. Just last week it seemed as if the Chancellor faced the chop. But a shaky performance in the election seems to have scuppered any planned changes.
Freed from this uncertainty, the Chancellor’s plans to extend the limits of the UK Business Bank and guarantee big infrastructure spend are a remarkable change of tack.
In the last few years, the UK government’s support for business saw budget cuts, job losses and shuttering of individual schemes like the Business Growth Service and the Manufacturing Advisory Service (the latter with no warning, whatsoever).
But now Keynes seems to be back in fashion and austerity is parked as the UK begins its divorce proceedings with the EU.