Looking back at 2023 and ahead to 2024 is a good time to consider some of the challenges facing not only UK businesses but the economy and country as a whole. There has been widespread media coverage of the recent GDP figures showing a flatlining economy and forecasts outlining that this scenario is likely to continue well into 2024. Added to this are the perennial poor productivity figures that have stymied the UK economy for the last decade or so.
Its easy to get drawn into the negative cycle of news but there are ways to address these challenges that are already in place. Grant funding from central and local government can, if properly directed, act as a catalyst for productive growth.
Areas such as R&D already benefit from innovation focused grant funding and tax incentives. However, there are many other grant funds that are dedicated to supporting a wide range of growth or efficiency related activities. They range from recruiting new staff and supporting overseas market development to purchasing equipment and improving commercial premises and energy efficiency. These activities are central to business growth and productivity and they are ultimately a key driver of economic growth and productivity increases.
There are also a set of often unseen secondary benefits to grant funding. The business awarded the grant will benefit directly from the funding – whether its upgrading equipment to improve productivity or hiring new staff to increase sales. However the spend itself also benefits the wider community. The company producing the equipment and its entire supply chain benefit from the purchase. The new employees benefit from the salary and in turn they pass that spend on.
This Multiplier Effect is an important driver of growth. Investment from grant funding, however, is unique in providing a double whammy when compared to straightforward investment in say infrastructure (although that will provide long term productivity benefits in most cases).
It would be a useful exercise to develop some sort of comparison of the overall benefits of different types of investment. Understanding the return on investment for £1 spent on say a road improvement project vs an innovation grant vs new equipment purchase would enable informed debate on the merits of each.