LONDON (2 July 2015) - Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE:AON), has said that the longer-term health of UK plc should be the prime aim of measures in the Chancellor’s Summer Budget on 8 July.

Tapan Datta, global head of asset allocation at Aon Hewitt, said:

“Freed from the constraints of a coalition government and with some loosening of the fiscal straitjacket over the past year, this is not an ‘emergency’ budget.  Of course, there is still a large budget deficit and the Chancellor will confirm the path towards eventual budget balance and show no fiscal largesse - that is a given. However, the key difference with this Budget is the potential shift in focus. After a prolonged period when the Exchequer’s financial fragility has been an overriding factor, it is time to move on.

“Given the Chancellor’s improving degrees of budgetary and political freedom, what the market would like to see are measures that help to boost UK PLC’s longer-term economic health. So far, tackling rising welfare spending has been a wholly dominant mantra of this government’s reform credentials – and worthy though this may be as an objective, our wish is that the focus should change to some of the other structural hurdles that impede UK economic performance. A better epithet to describe a budget that tackles these bottlenecks would be ‘productivity boosting.”

Tapan Datta continued:

“Given low levels of labour productivity growth in recent years, - which is widely acknowledged to be holding the economy and living standards back - a more concerted focus on this in the Budget would be highly desirable. Some of the causes of low productivity growth like the UK’s planning laws are beyond the Budget’s scope and politically difficult. However, the Chancellor could use tax incentives to boost what are still low levels of business investment and encourage lacklustre exports. Importantly, even a marginal simplification of the tax code would win plaudits given the inexorable rise in complexity over a number of years.” 

ENDS

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