Ministers are aiming to unlock international investment in key British industries such as electric vehicle and life sciences with £1.4bn in grants and plans to make it easier for foreign companies to relocate to the UK.
Rishi Sunak will use the Budget on Wednesday to encourage overseas investment, with plans to find and attract skilled workers into the UK including in professional services such as audit, accounting and legal.
This week, the government hosted a global investment summit in London followed by a reception at Windsor Castle with the Queen as part of its efforts to woo global financiers and multinational companies.
Many domestic businesses feel left behind after recent attacks by the prime minister on the use of overseas labour.
The Budget is expected to deal a further blow to UK businesses; Sunak is not expected to commit to wholesale changes to the business rates regime, which many business groups have demanded.
The chancellor will stick within self-imposed spending limits when he announces the results of his three-year spending review, which will set out Whitehall budgets until the next election.
On Sunday Sunak said he would address the parlous state of the public finances in the Budget but that he would also invest in public services, business support and to help working families.
He has some room for manoeuvre because the economy has fared better than expected in the Office for Budget Responsibility forecasts in March; public borrowing also fell by more than anticipated in September.
However, Sunak is dogged by fears of rising interest rates and the threat of renewed pandemic disruption, meaning that any additional spending will be constrained and will focus on priority areas.
Sunak told Times Radio on Sunday that he would have to “build into our plans some resilience” in the event of inflation and interest rates rising, forcing up government borrowing costs.
Among the new spending plans, ministers will promise to give cash to international companies with “strategically important” investment proposals, albeit after due diligence to ensure value for the taxpayer.
The new fund includes £354m to support investment in life sciences manufacturing, and more than £800m for the production of electric vehicles in the north-east and Midlands.
Sunak will also reveal a talent network team to help attract foreign skills by working with UK businesses and research institutions to identify skills gaps. It will then offer relocation support to skilled workers from overseas universities, innovation hubs and research institutions.
The programme will launch in the Bay Area in San Francisco and Boston in the US in 2022, as well as Bengaluru in India, before expanding to six countries worldwide by 2023.
Sunak said: “We want to make the UK the best place in the world to start, grow and invest in a business.”
The chancellor will make it easier for companies to relocate to the UK through a revised redomiciliation regime aiming to bring the UK in line with countries such as Canada, New Zealand and Switzerland.
He is expected to use the Budget to announce a consultation to draw ideas about how to best frame the new rules.
Next week, the government will commit £700m to a post-Brexit attempt to modernise UK border services to improve waiting times, streamline entry and visa process and bolster security. From 2023, new electronic travel authorisations will allow people to visit the UK for reasons such as tourism without requiring a visa.
Sunak will also announce a £3bn investment to help create what he calls “a high wage, high skill economy”, including spending on 16- to 19-year-olds and a quadrupling of “skills boot camps”.
The chancellor says the money will fund additional classroom hours for up to 100,000 16- to 19-year-olds studying for T Level technical qualifications and create 24,000 traineeships.
Among other areas expected to win additional funding are galleries and other cultural institutions, efforts to tackle clandestine immigration, the digitisation of the NHS and support for vulnerable families.
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