As the Budget approaches, anxiety is mounting over how Rachel Reeves intends to close the widening fiscal gap. Business confidence is already at its lowest ebb in years following the triple hit of higher National Insurance, increased corporation tax and the introduction of the Employment Rights Act. Any mis-step from the Chancellor now risks tipping the economy into recession.

Ministers are banking on higher levels of private-sector investment to fuel growth, with the IS-8 strategy positioned as the centrepiece of that effort. Since its launch, the Government claims it has already attracted more than £250 billion of investment into IS-8 sectors, supporting the creation of 45,000 jobs in recent months.

Among the latest investment announcements:

• In digital technology, a new AI Growth Zone in the North East is forecast to create over 5,000 jobs and bring in more than £30 billion of private investment.
• The DRIVE35 programme is set to channel £2.5 billion into the automotive industry, backing capital investment and advanced research.
• An £182 million Defence Skills package will fund five new Defence Technical Excellence Colleges, complemented by £220 million for test and evaluation facilities through the Defence Tech Scaler.
• A consultation on regulatory reform has begun, including a proposal to merge the Payment Systems Regulator with the Financial Conduct Authority.

With Financial Services designated as a core pillar of IS-8, further measures to stimulate investment in the sector are widely expected on Budget day — whether through targeted incentives, tax changes or regulatory overhaul. The London Stock Exchange, already under competitive pressure, risks losing its long-held global standing without meaningful intervention. Reforms that would be welcomed across the City include:

• Removing guardrails separating Investment Banking from Retail divisions
• Scrapping Stamp Duty Reserve Tax on share sales
• Streamlining visas for high-skilled finance and technology workers
• Simplifying IPO requirements

While any adjustments to the tax regime will inevitably dominate headlines, the policies aimed at revitalising Financial Services may prove equally consequential for London’s economic future. Expect close scrutiny on Wednesday.

We will also be examining the Budget’s implications at our final finance forum of the year next week. Those wishing to attend are encouraged to register soon, as places are limited.

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