On his first day as chancellor, Jeremy Hunt said he would have to make decisions of “eye-watering difficulty” to fix the gaping hole in the UK’s public finances. Since then, the government has priced up the job: £50bn.
Where to find the cash? With nothing off the table in Thursday’s Autumn Statement, early-stage investors and the high-growth companies they support must be prepared to take a hit. Indeed, there are rumblings that the chancellor is considering a cut to public R&D spending. Meanwhile, we should not discount the possibility – however unlikely – that the chancellor will opt for a reversal to the recently-announced extension of the EIS tax relief, the so-called sunset clause.
To either reduce spending on R&D or to scale back the impact of EIS would be a grave mistake. To do both would be a disaster. These cornerstones of Britain’s innovation ecosystem are critical to the development of the companies that will power the economy of the future. With the Bank of England forecasting the longest recession in modern history, it would be deeply unwise to jeopardise our recovery by inhibiting the companies that will make it happen....