The global pandemic, an energy crisis, the great resignation – to say the last few years have been far from business as usual would be an understatement. Tax policy and regulatory reform have increasingly become tools used to meet short-to-medium term government objectives, but what has been and will be the resulting effect of these changes when we consider UK competitiveness? This annual conference breakout session will explore the current outlook of UK competitiveness, which our esteemed panellists will agree, has tax and regulation at its heart.
Over the past few years, we have seen an extraordinary number of major events in the UK and across the world. To mention a few: a global pandemic that left streets deserted for the best part of a year; Brexit, and the resulting supply shortages the UK has faced; a war on the edge of Europe in Ukraine; an energy crisis; the great resignation, and sudden, unexpected, fiscal difficulties following September's mini-budget. Consequently, firms have had to continue to operate in the most uncertain of conditions, and with this new Government’s focus on growth, it is businesses that will be leading the way when it comes to righting the ship that is the UK economy. With every crisis, there has been a resulting response from the UK Government and more often than not tax policy and Regulation form a large part of it.
Tax policy has taken centre stage in the past few years not just in its capacity to generate revenues for Government spending, but as a lever the Government has been able to pull to protect people from the worst of the shocks to the economy that domestic and global crises have caused. When considering the policy environment businesses face today in the UK, we must address one of, if not the most, important focuses for businesses - competitiveness.
When we talk about competitiveness in this case, we are not just commenting on the headline rate of corporation tax in the UK when looked at in comparison to our international neighbours, but the many factors that both domestic and multinational firms consider when taking decisions on an investment into the UK or growth of their UK business. From a macro perspective, this could be the general structure of the UK economy, and from a micro perspective the types of domestic investment incentives the UK Government offers businesses that seek to locate and operate within specific Freeports or Investment Zones.
UK competitiveness cuts across many areas, from conditions which the UK can create that encourage large multinational firms to locate and do business here, to the availability of high-skilled workers and the way they interact with the labour market. This breakout session will assess and discuss the UK’s tax and regulatory environment. What is the current view and future expectations of UK competitiveness not only for the insurance sector but for businesses across every sector?
As time goes on, it becomes more apparent that governments across the world are becoming bolder when it comes to tinkering with the tax system. Especially here in the UK, tax and regulation seem to be growing topics of importance both politically and economically. One question we must consider is if regular change in both tax and regulation is a good or a bad thing. As mentioned previously, tax and regulation are both effective and readily available tools the Government has at its disposal to drive behaviours. Heavy regulation and high taxes tend to discourage the activities they are targeted at, but when those regulations and tax policies are seen to be unstable, does this create an environment where businesses seeking to invest in the UK economy are disincentivised because of uncertainty? What makes good tax policy and smart regulation? Does deregulation lead to market failures and unwanted outcomes, or does it unleash investment and grow the UK’s economy? Do good tax policy changes drive behaviours and encourage firms to take responsibility for achieving the Government’s economic objectives for the country? Or is there no such thing as good tax policy, when we consider that businesses currently are at capacity managing BAU and any wholesale changes come at a great cost, both financially and in terms of increased administrative burdens?
Join us in breakout Session B at the ABI’s Annual Conference on Tuesday 21 February 2023, where our esteemed panellists will seek to answer many of the questions posed in this blog and look to what the future holds for UK competitiveness.