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Spring Budget Briefing

Today the Chancellor of the Exchequer, Philip Hammond delivered the 2017 Spring Budget. In his first budget speech, the Chancellor outlined that growth rates were expected to be higher, with borrowing lower than the forecasts in the Autumn statement. Key pledges included an extra £2bn for social care services, a rise in National Insurance Contributions for the self-employed, measures to curb certain changes in business rates following the recent revaluation and a reduction in the share dividend allowance.
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Spring Budget Briefing

The Digital Strategy

Today the Government published its Digital Strategy which it hopes will provide a framework for ‘ensuring the UK is the best place to start and grow a digital business, trial a new technology or undertake advanced research’. The Strategy provides details on how Government hopes to achieve this, by building the right foundations (connectivity and digital skills), building a supportive regulatory framework and providing support to businesses to embrace digital opportunities.

Please click the button below to read our full analysis.

Digital Strategy Briefing

Employment Status Reviewed – Gig Economy Revisited

By Till Sommer, Associate Director, London

The degree to which gig economy companies have challenged the UK’s employment policy framework has been made clear by an internal Whitehall “Employment Status Review” which was conducted in 2015 but only published last week.

Most strikingly, the 2015 review fails almost entirely to touch on the policy problems raised by the gig economy. While the review looks at the challenges posed by ‘atypical working arrangements’ and considers issues such as zero hours contracts, it seems mainly concerned with solving the policy problem of distinguishing workers from employees. However, it does not properly engage with the dominant gig economy policy problem of deciding whether gig economy riders/drivers/partners are self-employed or workers. Read more…

2017 – an Internet Industry look-ahead

By Muirinn O’Neill, Consultant, London

2017 is once again set to be a big year for the internet industry with significant policy developments on the horizon. In the coming year, the Digital Economy Bill will become law; there will be changes to Ofcom’s General Conditions; and Government will be implementing their pledge to support the roll out of ‘full fibre’ networks. There will also be new Government funding for full-fibre broadband and changes to broadband advertising rules – all against a backdrop of Brexit and political instability.

Read more…

The Industrial Strategy – 23rd January

This morning, the Prime Minister unveiled the Government’s long awaited Industrial Strategy. Please find our summary and sector-by-sector analysis below.

The Industrial Strategy

Brexit Update – 12th January

 Top 3 Developments

Legal headaches

The verdict from the supreme court case is due shortly – with ministers preparing for a loss. So much so they have drawn up at least two versions of a bill that could be tabled after the ruling and processed quickly through the House. This isn’t the only legal woes that the Government face, a pressure group called British Influence are also pursuing legal action against the Government in regards to leaving the single market. The case is due to be heard next week, but it’s thought that further legal action could be heading the Governments way.

Changing of (EU) guard

Sir Ivan Rogers, who was due to leave his post in November, resigned as the UK’s permanent representative to the EU.

Number 10 moved quickly and named Sir Tim Barrow as his replacement, dismissing the resignation as simply Sir Ivan leaving early. However, his resignation will be a loss to the Government, and by highlighting a number of concerns that many have voiced of late when he spoke of ‘ill-founded arguments and muddled thinking’, there are worries of long and difficult negotiations ahead.

Brexit Backlash

May gave her first interview of the year to Sky News over the weekend with the aim of offering clarity on Brexit negotiations. In alluding to leaving the single market but not explicitly saying so, there remained an air of ambiguity that fed into Monday’s big policy announcement on the shared society. It has since been announced that May will be making a speech next Tuesday to talk about Brexit and her plans to actually offer more detail, it seems she can’t – or won’t – quite hit the nail on the head just yet.

UK Update

Great Brexpectations

The Prime Minister is expected to make a keynote speech next Tuesday setting out her Brexit strategy. She is set to reiterate the UK’s desire to control immigration and the desire to remove the UK from the jurisdiction of the European Court of Justice. There are also set to be some olive branches extended – with a nod to the areas where the UK wants to continue cooperation, particularly those policy areas which transcend borders – security, science and law and order.

The decision may define whether or not May can stick to the self-imposed deadline of triggering Article 50 before the end of March 2017.

The Government will then follow with the much-awaited publication of the Industrial Strategy paper, which will serve as a means of consulting with and engaging the business community on the UK’s long-term approach to supporting economic development across the regions and harnessing high-growth sectors.

Sterling takes a pounding

The fragility of the pound against Brexit-related uncertainty was especially apparent in the last few weeks. Despite the Prime Minister’s Christmas message that sought to unite the country, her comments in the New Year that Britain will not attempt to cling to “bits of EU membership” and the subsequent media murmurings of a ‘hard’ Brexit, meant that the pound traded against the dollar at its lowest level since late October.

The pound has tended to suffer every time hints that the UK could leave the single market have emerged. Although May will argue that single market access is not a binary choice, the difficulties she faces were highlighted by Jonathan Faull, formerly head of the European Commission taskforce on negotiating the reform package to convince the UK to stay in the EU before the referendum. He disputed Brexit Secretary’s David Davis MP’s suggestion last month that the UK could pay for privileged access to the single market, saying that this “is not something that’s on sale”.

Corbyn’s movement chaos

This week, Labour leader Jeremy Corbyn attempted to relaunch his embattled leadership with a major speech on Brexit. Despite briefings in the media prior to the speech which suggested that he would propose controls on freedom of movement from the EU, a change in position on this issue did not materialise. In fact, many interpreted the Labour leader’s speech as confusing the party’s position on this key issue further by saying “Labour is not wedded to freedom of movement for EU citizens as a point of principle, but I don’t want to be misinterpreted, nor do we rule it out”.

Many commentators have suggested that Corbyn’s speech highlighted the Labour Party’s ongoing struggles to hold the Government to account over the pending Brexit negotiations. Indeed, many of his comments related to Brexit were in fact overshadowed by the allegedly unplanned announcement of a cap on maximum earnings, which was swiftly clarified by his team later in the day.

Several days prior to Corbyn’s speech, the Deputy Leader of the Labour Party, Tom Watson, also failed to provide clarity on their position on freedom of movement, suggesting that it was “unfair” for the party to be asked this before the Prime Minister had set out her position.

Immigration Skills Levy? Maybe not…

The Government experienced its own freedom of movement confusion this week. Immigration Minister Robert Goodwill briefly caused a business backlash by suggesting that employers could have to pay a £1,000-a-year levy on every EU skilled worker they recruited. He suggested to members of the House of Lords that a so-called “immigration skills levy” could be introduced to encourage businesses to employ British workers.

Number 10, however, later played down Goodwill’s statement, clarifying that the Home Office is considering a “whole range of options” to reduce immigration.

Carney warns EU of Brexit risks

In what has been described by some in the media as a significant change of position, the Governor of the Bank of England, Mark Carney, stated that Brexit is no longer the biggest risk to the UK’s financial stability and highlighted instead the risks that Brexit poses to the financial stability of the EU. The Bank chief explained that the UK’s financial services sector provides a great deal of liquidity and capacity support for the EU and highlighted that a break in this could be damaging for EU Member States.

Appearing before the Treasury Select Committee, the Governor explained that the measures that the Bank had taken since the referendum, including the interest rate cut and the extra liquidity made available to banks and businesses, had worked. Additionally, in news that will be welcomed by Number 10 and the Treasury, Carney explained that the Bank was looking at upgrading its UK economic forecasts for 2017 following the recent publication of a range of positive economic data.

Independence? Not yet!

Meanwhile, Scottish First Minister Nicola Sturgeon explicitly ruled out holding a second referendum on Scotland’s independence this year. This is despite the Scottish Government having already drafted legislation and Nicola Sturgeon repeatedly warning the Prime Minister that she was not ‘bluffing’.

This news comes after the First Minister published a paper at Christmas that suggested Scotland could adopt a ‘Norway-style’ plan. This would mean Scotland remaining as part of the UK, but still having access to the single market. However, this has been strongly criticised by senior Norwegian politicians who say it is impossible.


European Update

EU Presidential hopefuls unified over Brexit deal

With the elections for the presidency of the EU Parliament only five days away, MEPs face an unsettling reality: no one quite knows who is going to win. Whilst Antonio Tajani of the centre-right European People’s Party is currently the favourite as the candidate of the largest Parliamentary grouping, his fellow Italian Gianni Pittella of the left-leaning Progressive Alliance of Socialists & Democrats, may just clinch it by creating alliances with the Greens and other smaller groupings.

Guy Verhofstadt, the chief EU Brexit negotiator is also running for the presidency, and has faced criticism from some sections of Parliament for entering talks with Italy’s 5 Star Movement, who are actively Eurosceptic. Whatever the outcome of the election, there was consensus between the candidates in their debate on Wednesday night, that the four freedoms of the European Union would be their key focus for any Brexit deal. Both Tajani and Pitella suggested that any deal that sought to water down these freedoms would ultimately be rejected by Parliament.

Trump interviews Brexit Supporter as US EU envoy

Ted Malloch, a professor who backed Brexit, was interviewed for the job to become President-elect Donald Trump’s ambassador to the EU. The rumoured front-runner, Malloch, was apparently recommended for the position by Nigel Farage, and said he was confident that Britain would move to the front of the queue for a trade deal with the US.


17 January 2017

o             European Parliament presidential elections

o             Theresa May delivers speech on Brexit

23 January 2017

o             Expected publication date for the Industrial Strategy

o             Possible date for Supreme Court decision on Brexit challenge

3 February 2017 European Council – informal meeting of the 27 heads of state or government

March 2017 Article 50 to be triggered

The 2016 Autumn Statement: What to expect

By Craig Melson, Consultant, London

The 2016 Autumn Statement is the first major financial set piece for Theresa May and Philip Hammond and they need to show they have policies to make ‘a country that works for everyone’ allay the concers of businesses worried about Brexit while not having money to spend.

This paper sets out what we expect to be included across technoogy and infrasturcture, the context and numbers behind the Autumn Statement and how the Government have approached the statement.

Read our Autumn Statement predictions here

Brexit Update – 18th November

 Top 3 Developments

Leaked memo hints at Brexit chaos: A Deloitte memo leaked this week hinted at a huge lack of resource in the civil service to deal with Brexit, suggesting that Whitehall may need to recruit up to 30,000 new staff to deal with the workload. Whilst this figure was vehemently denied by Downing Street, comments from Head of the Civil Service John Manzoni that they were doing 30% too much to do it all well gave the memo some credence.

The Lady is not for hurrying: Comments from Supreme Court Deputy President Lady Hale hit the headlines this week as she suggested Government may need to comprehensively replace the 1972 European Communities Act before they can trigger Article 50, which would make May’s self-imposed March 2017 deadline virtually unachievable.

Prosecco problems: Boris Johnson was criticised this week by Italian Ministers, following his assertions that Italy would lose out on prosecco exports if the UK was not offered tariff free trade. Elsewhere, Johnson faced further criticism for his comments in a Czech newspaper interview that freedom of movement as a founding principle of the EU was nonsense.


UK Update

Great Brexpectations

A leaked Deloitte memo this week said that Whitehall is currently working on more than 500 Brexit-related projects and may need to recruit as many as 30,000 extra civil servants. The memo also claimed the Cabinet splits mean that the Government could take another six months to agree on a Brexit negotiating stance. Downing Street immediately sought to distance itself from the memo labelling it an “unsolicited document that has had nothing to do with the government at all”. The claims, however, were given extra credence after John Manzoni, CEO of the civil service said that that Whitehall already had too many objectives before the referendum vote. All of this underlines the difficulty of managing Brexit and adhering to the end of March deadline that the Prime Minister has set for triggering Article 50.

Meanwhile, the Government is focused on their forthcoming Supreme Court appeal which will decide whether Parliament will be consulted before triggering Article 50. If the Government fails, they will reportedly introduce a short three-line Bill, which would be difficult for critical MPs to amend. Supreme Court Deputy President Lady Hale, however, said that the upcoming appeal raised “difficult and delicate issues” about the relationship between government and parliament; suggesting that the Government may be forced to comprehensively replace the 1972 European Communities Act before triggering Article 50, significantly delaying the process.

No quickie divorce say academics

The Exiting the EU Select Committee held its first session this week, taking evidence from two academics and a former Permanent Under-secretary at the Foreign Office as part of its inquiry into the UK’s negotiating objectives. The witnesses warned that, despite the suggestions of Committee member and leading Brexiteer Michael Gove, Brexit will not be a pain free “quickie divorce”. They also stated that  it was “inevitable” that the a transitional agreement would be needed following the UK’s withdrawal in 2019 which could see the UK having to continue to pay into the EU budget and accepting some level of freedom of movement. The Committee’s next evidence session is taking place on 23rd November.

Carney fights back as more surprising economic data is published

The Governor of the Bank of England, Mark Carney, used his appearance in front of the Treasury Select Committee to criticise those who claim that loose monetary policy has resulted in an increase in inequality. In comments which have been interpreted as a criticism of President-elect Trump and Theresa May, Carney explained that low global interest rates and rising inequality were driven by “much more fundamental factors” and stated that those who excessively focus on monetary policy are engaged in a “massive blame deflection exercise”. May criticised low interest rates in her speech at Conservative party conference as benefiting the rich whilst making savers poorer. The comments have prompted debate over the independence of the Bank of England, with Ed Balls taking a break from strictly to voice his opinion that whilst the Bank should remain independent, there was also a need for accountability and possibly a new Board.

Meanwhile, further economic data emerged this week suggesting that the impact of Brexit on employment and inflation was yet to be felt fully. On Tuesday, the ONS revealed that October’s inflation rate had fallen to 0.9% from 1% in September. Additionally, ONS data from Wednesday showed that unemployment has fallen to an 11 year low as the jobless total fell 37,000 in the period from July to September to stand at 1.6 million (4.8%).  However, economists have warned that inflation is set to rise considerably in 2017-18 as the effects of the devaluation of sterling are felt in retailers’ supply chains. It is also likely that Chancellor Philip Hammond will admit to a £100 billion budget deficit in the next five years in next week’s Autumn Statement. Slower growth and lower-than-expected investment will hit tax revenues, supporting the Treasury’s pre-referendum warnings that the long-term economic costs of Brexit are high.


European Update

Brexiteers lost in translation

Brexit supporting papers and politicians were enthusiastically endorsing a speech by Angela Merkel this week in which she apparently softened her stance on freedom of movement and migration controls. Unfortunately, the supposedly finer details of Merkel’s message got lost in translation. While the German Chancellor did express a willingness to discuss the rules around freedom of movement, she explicitly stated that the four freedoms of the EU could not be picked apart. In fact, Merkel’s actual offer of compromise looks rather similar to the deal that was offered to David Cameron ahead of the referendum.

For our German readers, Merkel’s speech can be found here

Boris’s prosecco headache

The Foreign Secretary endeared himself to the Italians this week by telling Italian Ministers they should support the UK’s quest to retain single market access without freedom of movement in order ‘to avoid losing prosecco exports’. Boris has been busy this week telling a Czech newspaper that the idea of freedom of movement as a founding principle of the EU was “nonsense” leading to wide criticism, including from Guy Verhofstadt, the European Parliament’s chief Brexit negotiator who wrote on Twitter: ‘Can’t wait to negotiate with Boris Johnson, so that I can read him Article 3 of the Treaty of Rome.’

Brexit divorce deal could cost £50bn

The EU could seek £50bn from the UK to pay for future spending commitments as part of the Brexit terms. The ‘Brexit bill’ will undoubtedly anger Downing Street and has caused concern among Member States who don’t want demands for money to poison negotiations. The same source also revealed Brexit will take place mid-2019, with a scaled withdrawal over a period of years and that Barnier and the institutions will be firm on immigration.

UKIP to boost EU budget (with a fine)

The UKIP led European Parliament Group ‘Alliance of Direct Democracy in Europe’ faces a fine of £150,000 for misspending public funds. Money designed to be used in Brussels was apparently used by UKIP to conduct polling in target constituencies ahead of the 2015 General Election, in contravention of EU rules that stop MEP funds from being used in national elections.



·         23 November Chancellor to give the Autumn Statement

·         23 November Brexit Committee hold second evidence session

·         5 December Article 50 ruling appeal starts

·         15 December Next EU Council Summit

·         March 2017 Article 50 to be triggered

The National Cyber Security Strategy: Opportunities for the cyber-security sector

By Craig Melson, Consultant, London

Last week the Government launched the new National Cyber Security Strategy which sets out ambitious interventionist policies and £1.9bn of funding to improve the nation’s cyber defences.

The strategy (launched to much fanfare by the Chancellor) doubles the budget of the the 2011-15 strategy and is centred around three distinct strands:

  • DEFEND – Having the means to defend against threats and stop attacks from succeeding.
  • DETER – Be a hard target for ‘all forms of aggression from cyberspace’ with the resources in place to proactively launch cyber-attacks.
  • DEVELOP – Making the UK a world leading cyber-security hub, with a strong eco-system and measures to get the right skills in place.

The first two strands include many more interventionist policies with some clear directions for private sector operators who Government clearly feel have not done enough to protect themselves or their customers. This is a clear departure from the previous Government that made strides defending the public sector from attacks, but did not want to compel businesses or over-regulate. As well as technological and funding solutions, the Government is also calling for a cultural shift, including a potential ‘cyber ethics’ programme to deter technically minded young people from taking up cyber-crime.

The third strand, ‘develop’, is exciting for the sector with some significant new commercial opportunities for cyber-security companies of all sizes. Firms in this area should be talking to policy makers about these opportunities and will most likely be looked upon favourably as they are high tech, export-friendly, high-skilled, pay well, rich in SMEs and help keep the state safe –  all things Westminster and Whitehall like.

So what are the new opportunities?

Whilst the UK lags behind the USA and Israel in developing new cyber products, we are certainly European leaders and Government wants to develop this further. The strategy details plans to spend to support the cyber-security market, laws to make companies more cyber-aware (particularly in critical infrastructure, networks and banks) a public awareness campaign, an expectation that all businesses need to ‘get their house in order’ on cyber and efforts to recruit a new generation of cyber-security experts. The strategy has policies for all sectors, but some ways for cyber vendors to get involved with the strategy include:

  • Creating two Innovation Centres to ‘drive the development’ of new companies.
  • Government funded testing facilities for companies to trial new products.
  • Reforming the accreditation and procurement for cyber-security products.
  • Helping start-ups access funds.

Who should you talk to?

The National Cyber Security Centre replaces the myriad of Government bodies that deal with cyber and industry should welcome this. As well as fostering a more collaborative public and private sector response to cyber-threats, this streamlining should make gaining accreditation for new products easier and create one set of policies.

Given the rightful importance the Government places on cyber, companies looking to export should use the strategy to push the newly formed Department for International Trade who now hold the exports brief, coupled with the strategy, this will be a great way to highlight to the various parliamentary committees, Shadows and Ministers how cyber-security can generate growth and help with the trade deficit.

The strategy shows that Government wants to make significant progress on improving the nation’s cyber defences and represents a real chance for cyber-security companies to raise their profile and demonstrate their innovations.

Does the strategy go far or spend enough?

The Chancellor called cyber-attacks a ‘Tier One threat’, but £1.9bn is not exactly ‘tier one’ money. While a welcome boost, in defence terms it would buy fewer than twenty F-35 jets or two submarines. Much of the money isn’t new either – some of it has been re-allocated from elsewhere or was confirmed already.

The strategy rightly sets the tone and approach the Government wants to take on cyber-security, but this big picture focus somewhat ignores the day-to-day cyber-attacks most people face. There were over five million cyber-crimes reported annually and prosecution rates for cyber-enabled and dependent crimes are very low. The ‘defend’ and ‘deter’ strands seek to bolster security and could reduce the number of successful attacks, but not every police force has a cyber-crime unit for example, and the strategy uses vague language on how police forces will go after cyber criminals, but does not discussing how, or what new resources the police will get.

Government also needs to work better between departments to be consistent and make sure their own policies do not undermine the strategy; for example, the Investigatory Powers Bill is set to become law and is not only going to generate huge amount of data, but could undermine encryption – an essential tool against hackers.

Cyber-security that works for everyone

The Government has now essentially formalised what the cyber-security industry has been saying for years – people and businesses need to be taking cyber-security far more seriously. After a year of high profile attacks on networks and five million reported cyber-crimes, the Government has obviously felt compelled to intervene, especially in the private sector.

Those in the sector should now seize this opportunity to talk to the Cabinet Office and National Cyber Security Centre on how their products can make a difference.

Belgian Politics: Budgetary agreement reached by the government

By Koen Vandenweyer and Frédérique Dell

Last Friday Belgium’s Federal Government reached an agreement on the 2017 budget, after almost two months of negotiations . In the last phase the negotiations got delayed by a dispute over CD&V’s (Flemish Christian Democrats) late demand for a capital gains tax on shares. After postponing the “State of the Union”, the government was faced with the hard deadline for handing in its draft budget to the European Commission.

Read more…

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