The Big Question: What would investors like to see from the Chancellor's Budget on 11 March?

Eight industry experts tell Investment Week what they hope to see from Sajid Javid's forthcoming Budget on 11 March.

Although this Budget is long overdue, the Conservative election manifesto already gave us some clues on what to expect – a smaller fiscal boost than many were expecting before the election. 

The 'triple tax lock' – ie the promise to not increase income tax, national insurance and VAT – combined with the pledge to run a balanced budget within three years does not leave much room for a big splurge on day-to-day spending beyond the 0.7% of GDP already announced in last September's spending round.

Any extra giveaways will have to be funded by other taxes or changes to allowances. 

But there is some wriggle room on public investment, and with the Government's promise to deliver a "decade of renewal", we would be surprised if there was not something on housing, infrastructure and green energy.

Another key area of focus for holders of index-linked bonds and pension funds will be the future changes to RPI inflation. Investors are highly like to call for compensation, though we see a higher barrier to this being paid.

Sajid Javid is likely to announce a highly stimulative Budget in March for three key reasons. Firstly, there will be a desire to clearly signal an end to years of perceived austerity. 

Secondly, he will be keen to give a much-needed boost to the economy where uncertainty and hesitancy have stalked the economy for too long. 

Lastly, he will want to win over some of the non-core 'Northern Brexit' voters with some more radical infrastructure stimulus. This is the area that may see substantial levels of proposed borrowing to fund larger-scale projects.

Consequently, we may witness quite a radical Budget that aims to mix macro UK stimulus with more micro-targeted boosting of certain areas, all designed to provide a much-needed lift to consumers.

As this is the first Budget for a Conservative party with a significant parliamentary majority, the Chancellor may make more fundamental reforms; there are many areas that could be targeted, from social security to pensions, or to the Civil Service itself. 

Such a large-scale fiscal boost could be exactly the medicine that the anaemic UK economy needs right now.

The Chancellor has an uncommon opportunity in that he has a whole parliamentary term and a strong ruling majority, so he should not waste the opportunity to be bold. 

The first priority for him should be to work on repaying the favour of those in Labour heartlands that "lent" their vote to the Prime Minister. A degree of fiscal loosening would certainly help here but targeting it so as to avoid wastage is key.

Tax giveaways, while tempting and shorter term in their impact, need to be handled carefully as the Treasury needs to shore up confidence in the UK economy going into the next phase of Brexit negotiations. 

Simplification of the UK's tax law should help small businesses and should also aim to level the playing field between domestic and multinational firms.

One topic will continue to dominate investors' stance towards the UK in 2020 – Brexit. The question has changed, but concerns about the UK eventually splitting from the EU without a trade deal remain. 

These concerns are also likely to weigh on the economy this year and so investors will welcome any policies from the Chancellor that can support the economy, especially moves that could boost business investment. 

A large increase in spending on infrastructure is likely, but this may not have an immediate positive impact on the economy and markets given the long lags typically involved in these projects. Any ‘front-loading' or ‘quick wins' in this area are therefore likely to be welcomed by investors. 

Increased spending will be well-received, but stretching the fiscal rules too far would spark concerns from investors. The UK's debt-to-GDP ratio remains high and a meaningful deviation from reducing this burden may be met with less buying.

Many investors would welcome a comprehensive review of the rules around pensions and tax relief. Whether they worry about breaching their annual allowance through the complexity of the taper, or breaching the lifetime allowance on the back of strong investment returns, it can be viewed as a punitive system of incentives for those wanting to save for retirement.

We find ourselves in a position where a number of higher earners – perhaps most notably doctors – are reducing their hours or retiring early due to the increasingly untenable tax bills arising from their pension funding. 

This also extends to those paying sizeable lifetime allowance tax charges simply because their investments have grown over the many years they have been saving. 

Both of these seem entirely at odds with a pension system where we want people to save more, and to take increasing responsibility for funding their own retirement.

The start of a new decade and a new term in Government seems like an ideal time to ensure the tax system for pensions is fit for the future.

Brexit has absorbed the UK policymakers' bandwidth in recent years, meaning that other pressing issues, such as sluggish productivity growth and persistent regional inequalities, have fallen by the wayside. 

Productivity growth is the main driver of UK living standards in the long run, hence tackling low productivity growth should be at the top of the policy agenda. Accordingly, the Budget should focus on improving human capital and infrastructure. 

In this respect, the Chancellor's adjusted fiscal rule for investment spending – raising the limit for net capital spending to 3% GDP from about 2% – is a welcome development. That will free up about £100bn for public investments over the next five years. Also, the focus on infrastructure – notably in left-behind areas – is appropriate. 

That said, I would like to see more attention to policies concerning research and education. More public investment in research – possibly in partnership with the private sector – is needed to allow for innovation, especially in anticipation of fading EU funding. 

In addition, there should be more resources for targeted education plans aimed at updating the labour force (continuous training) and spreading the skills that are needed for the diffusion of new technologies (apprenticeships and programmes to connect graduates to SMEs).

The Government is committed to achieving a net zero carbon economy by 2050. Investors and businesses now need to see the practical details on how this will be achieved. The Chancellor has said that he wants to “prioritise the environment and the cost of living” in his first Budget. We hope to see practical steps that accelerate the deployment of low-carbon technologies. 

Top of this list should be support for the retrofit of energy efficiency technologies in homes, including building insulation that will cut both carbon emissions and heating costs. Road transport is now the UK's largest single source of carbon emissions, but electric vehicles (EVs) have now come of age with over 150 different models of EVs on the market. 

In 2019, 7% of all vehicles sold in the UK were alternatively fuelled cars. We need the Government to get forcefully behind the wider deployment of EVs with stronger incentives and a more aggressive roll-out of enabling infrastructure, including fast-charging stations.

The question should perhaps be what would investors not like to see in the Budget. From a product perspective, in the past, moves to simplify pensions regulations have often led to the opposite, so change for change's sake should be avoided.

Any merger of the capital gains tax bands would be undesirable for our clients, as would any removal of the special status of AIM-listed companies for IHT/VCT vehicles. 

Having said that, for those investors that use gifting allowances, a long overdue increase in the normal annual allowance would not go amiss.

There are a few things that could help boost UK assets. From a property perspective, help for the high street has been rumoured, with business rates being a headwind for many retailers, so a change here would be welcome. Changes to company voluntary arrangements (CVA) rules could also benefit landlords. 

Increased spending on infrastructure projects would be beneficial, as would any further boosts for the technology sector, to help some of our leading smaller companies flourish on the global stage. 

Ultimately, for UK assets, certainty around the future relationship with the EU will probably be a bigger boost than anything Chancellor Sajid Javid might announce.