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KPMG: Govt's 'new deal' is welcome, but more ambition needed

Jun 30
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KPMG: Govt's 'new deal' is welcome...

Boris Johnson's announcement of what the government is calling a "new deal" for the UK as it seeks to stage an economic recovery from the coronavirus pandemic is welcome, but doesn't go far enough, according to KPMG.

The prime minister said now is the time to be "ambitious" as he announced his £5 billion plan in the West Midlands, but the professional services firm insisted "more ambition" is needed.

'Build, build, build'

One of the key messages in Mr Johnson's speech in Dudley was to "build, build, build", with a strong focus on delivering new homes and infrastructure.

The plan outlined investment projects including:

  • £1.5 billion for hospital maintenance
  • £100 million for 29 road network schemes
  • More than £1 billion to fund school construction

The announcement came as the Office for National Statistics released figures showing a 2.2% contraction in the UK economy between January and March - the joint largest fall since 1979.

Mr Johnson said the UK "cannot continue to be prisoners" of the Covid-19 pandemic and the resulting lockdown, adding that the government is "preparing now, slowly, cautiously, to come out of hibernation".

"We must use this moment now… to plan our response and to fix the problems that were most brutally illuminated in that Covid lightning flash," he added.

Labour leader Sir Keir Starmer said there was "not much of a deal and not much that's new" in the announcement.

He stressed his party is "not going to argue against a recovery plan", but "the focus has to be on jobs".

The Confederation of British Industry said the prime minister had set out the "first steps on the path to recovery", but insisted the focus on rescuing viable businesses "cannot slip while the UK looks to recovery".

'Even more ambitious'

KPMG also noted that committing to spending on infrastructure to "keep the economy moving in the short term" is "a step in the right direction".

However, Jan Crosby, UK head of infrastructure, building and construction at the firm, noted that £5 billion "doesn't go that far when broken down to individual projects".

"The programme should be even more ambitious - much larger and focused on other areas that also need levelling up: social housing; communities and high streets; digital infrastructure; championing accelerator infrastructure for the creation of new export industries," he added.

Mr Crosby urged the government to use this opportunity to "transform delivery" in construction and infrastructure, with an emphasis on facilitating access for smaller businesses and supporting trends like energy efficiency and technology-enabled buildings.

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