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John Harcourt's budget commentary features in Best Advice

Tuesday 30 October 2018

The budget 2018 saw Chancellor Philip Hammond increase the Annual Investment Allowance from £200,000 to £1m for two years.

John Harcourt, Kajima's Head of Property, commented that "the Chancellor’s decision to increase the UK’s annual investment allowance is a welcome one, and should boost innovation and competitiveness in the UK at a time when the country’s capital allowance regime has been marked the least competitive of all G7 countries.

“Increasing investment in this way could provide a critical opportunity for the UK to become a key player in a sector such as logistics, through investment in automation and robotics.

"The state of the UK’s logistics industry is certainly encouraging, with total annual return for distribution warehouses some 17% in Q4 2017, up from 14.7% in the previous quarter. Uncertainty around trading relationships post-Brexit could however cause operators to lose confidence in future business prospects in the sector, and so if logistics is to continue on this upward trajectory and remain one of the industrial pillars of the British economy it is critical that the UK consolidates its trading relationship with Europe ahead of our departure from the EU.

"This in part can be achieved by creating an attractive environment for UK investors and ensuring continued access to EU markets to match that of Central and Eastern Europe (CEE), which as a region has seen investment of over €13.1bn in 2017 in the region’s logistics sector and has been at the forefront of growth following the expansion of its distribution centres and the eruption of digital trade as a result of the EU’s Digital Single Market Strategy.

"So while increasing the UK’s annual investment allowance is an excellent start, developing a broader strategy to attract investment and spur innovation is key to the UK’s logistics sector enhancing its prospects and helping to drive the growth of the UK economy.”

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