If George Osborne does one thing in Budget 2012 it should be to demonstrate his commitment to a proactive industrial policy. The UK automotive industry has secured more than £4 billion of new investment from global vehicle manufacturers during the last year for new model programmes, facilities and technology. This has created new opportunities for UK based engineering and manufacturing businesses, but they need help and the right mix of incentives to ensure they do not miss out.
A successful budget would see the chancellor increase capital allowance, publish the details of the planned reforms to the large company R&D tax credit and ensure credit easing brings direct benefit to companies in the real economy. Rebuilding our manufacturing base and creating high value jobs will take time, but if the chancellor recognises and embraces the need for an active industrial policy it will send a powerful and positive signal to businesses about the long-term commitment of government.