UK government sets out devolution push to drive regional growth

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UK devolution for growth

Highlights

Healey will announce £150 million from the British Business Bank targeted for northern England innovative firms, providing £5–15 million per company to attract private investment.
Healey and Burnham reaffirm their commitment to previous fiscal rules, aiming to balance day-to-day spending with tax revenues by the end of the decade.
Investors remain concerned about budget pressures from rising oil prices due to the Iran war, shrinking fiscal headroom, and potential higher taxes to fund social care and defence.

Devolution plan and investment measures

As reported by Reuters, Healey is expected to tell a manufacturing site event on Monday that Prime Minister Andy Burnham's devolution agenda can help bring growth to "every postcode" by giving city regions more power to shape local industrial strategies and attract private investment.

According to a release from his office, Healey is due to say he wants wealth creation, profitable businesses and an active, accountable state at all levels to remove blockages and create conditions for more investment.

He is also expected to announce that 150 million pounds already allocated from the British Business Bank will be earmarked for innovative firms in the north of England. The funding is intended to provide between 5 million pounds and 15 million pounds per company and draw in additional private capital.

Budget pressure and fiscal discipline

Healey is using the speech to underline his commitment to fiscal discipline as he seeks faster growth in Britain's sluggish economy. He and Burnham have already pledged to keep the fiscal rules adopted by the previous government, including balancing day-to-day spending with tax revenues by the end of the decade.

That stance comes as pressure builds before Healey's debut budget, with investors worried about the inflationary effects of higher oil prices linked to the Iran war, shrinking budget headroom and rising spending commitments. Burnham's plans for expanded social care and higher defence spending are also increasing expectations that the budget will need to raise billions of pounds in tax.

Our earlier report on the UK’s research-to-industry gap explained why Britain excels in research and start-ups but often struggles to scale companies domestically. We noted that limited late-stage capital, high operating costs and infrastructure constraints have pushed many university spinouts and fast-growing firms toward foreign buyers, overseas funding and listings, keeping more of the value creation outside the UK.

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