Chancellor of the Exchequer Jeremy Hunt said he’ll plow £4.5 billion ($5.6 billion) of funds into eight manufacturing sectors including cars and green industries as he seeks to bolster industries the government sees as key to growing the UK economy.
The funding includes £2 billion for the automotive industry, £960 million for clean energy and £975 million for aerospace, the Treasury said late Friday in an emailed statement. However, in an indication of the tight fiscal conditions Hunt is operating under as he prepares a tax and spending package for next week, the cash won’t be made available to manufacturers until 2025 — after a general election that’s widely expected next year.
The chancellor is trying to boost the British economy without stoking inflation as he prepares a package of measures for his Autumn Statement on Wednesday. It’s one of the few remaining opportunities for the Conservatives to make a dent in Labour’s 20-point poll lead before the election, which the government must call by January 2025.
But Hunt has limited capacity for giveaways. Treasury officials say fiscal rules left him with about £15 billion of headroom before he began preparing new policies. While that’s up from the record low of £6.5 billion in March, it’s still low by historic standards. Hunt said the government’s cash will serve to crowd in more private investment.
“Our £4.5 billion of funding will leverage many times that from the private sector,” Hunt said in the statement. That “in turn will grow our economy, create more skilled, higher-paid jobs in new industries that will be built to last.”
The package also includes £520 million for life sciences. The cash for the automotive industries will support electric car manufacturers and their supply chain, and the funding for aerospace will help develop zero-carbon aircraft equipment, according to the Treasury. The funding forms part of an ‘Advanced Manufacturing Plan’ to be published next week, it said.
Bloomberg reported last month that Hunt was considering pledging hundreds of millions of pounds to support electric-car manufacturing as part of his response to US President Joe Biden’s $369 billion package of green subsidies enshrined in his Inflation Reduction Act.
The government will also publish a battery strategy next week, setting out how it plans to achieve a competitive supply chain in that industry by 2030, as well as launching a Hydrogen industry task force to maximize investment for UK manufacturing of hydrogen propulsion systems, the Treasury said.
